Consider the following not so hypothetical scenarios and write down your answers.
- There is a dangerous flu outbreak but fortunately there is vaccine for everybody distributed freely. Due to operational limitations you have to stand in line for 4 hours to get it for you and your family. Is it acceptable to charge $100-$500 to give the option of skipping the line?
- Is it acceptable to allow those driving by themselves on car pool lane for a toll?
- Is it acceptable to let a white color criminal pay a fee per night to upgrade their prison cell?
- Your hotel gives you free Wifi at slower speeds. For a fee you can get better and more predictable connection. Is that acceptable?
- You did not win the ticket lottery to see Pope. But you see someone willing to sell their tickets to you for a price. Is it acceptable?
- You or your loved one is in need of organ transplant. But you are farther out in the waiting list. Is it acceptable to let you pay a price to go to the head of the line?
- Prisons allow controlled way for inmates to make phone calls to outside world. But the costs today are exorbitant and often they are charged a flat fee for 15 minutes even if the call lasted just a few seconds. Is this acceptable?
I wonder if your answers will be different when you have to say it out aloud in the presence of others vs. writing them down.
My answers are YES to scenarios 1 through 5 uncertain for 6 and NO for 7.
In a recent Atlantic article Michael J. Sandel bemoans the fact that now everything is for sale. Here is how I think about value unlocking and selling access. In general there is considerable inefficiencies in the system. From pricing, access, delivery and support the system is rife with inefficiencies that are either due to poor design or deliberately introduced with the wrong notion of what fairness means.
Ethics and fairness come first no doubt. But that should not preclude any of us from monetizing certain aspects by charging those with higher willingness to pay and wherewithal to pay for the value delivered. Fairness should only mean not denying access for a common resource.
Take the vaccine example above. I said no supply constraints so we don’t deny access to those who wait in line without paying to skip it. But what if supplies were limited? Then allowing access to only those who can pay the price is not completely fair. I hedge my position here because this happens everyday, as most life saving drugs cost a lot and not affordable to everyone.
I posit fairness argument holds true for scenarios 1 through 5. The monetization method simply relieves the inefficiencies and expands the value pie – those who pay for priority access clearly see higher value from it than the money they pay and the marketer/organization gets to monetize that value.
In case of organ donation, I simply do not know. There is no free market for organs, not enough laws to assure consent and with today’s perceptions and repugnancy I cannot take a stand.
Finally the case of prison phone calls. Prisons could simply have said no phone calls to anyone. That would still be fair but not humane. There is a basic human rights aspect in allowing these calls – take for instance a parent be able to occasionally hear their child’s voice. But with the current pricing scheme it reduces or even eliminates access to those who cannot afford. A better option is a tiered pricing scheme, or product versioning, that allows the system to capture value from those with higher wherewithal to pay and still allowing those with limited means to avail themselves of the precious connection.
I see the prison phone case as different prison cell upgrade because upgraded cell is not a basic need that is being denied.
That is my stand. As long as we provide customers the options and same level of access it is perfectly fair to put a price tag on anything.
Finally I leave you with this. I happen to have access to a sixth grader and I try sometimes to get her to test out my hypotheses. As a treasurer of student body she is responsible for generating revenue. Her school holds Halloween and Spring dances to get middle schoolers to socialize. Fifth graders want in in these dances but are denied access. I asked my favorite sixth grader to float the idea of allowing fifth graders in the dance for a $5 ticket. Naturally that was shot down by the sixth grade as unfair. But what do you think?