Sunday, June 6, 2010

Paying Extra for Customer Support

I recently downloaded "Everlong" by Foo Fighters on my iPhone. Except, try as I might, I kept getting the following error message:

I was trying to file for support on the Apple Web site, when I learned that it costs $29 to talk to Apple if it's been more than 90 days since you bought the product. This led me to issuing the following tweet:

Eventually, I read around online and figured out that the problem could be rectified by downloading the song to my computer and going through the arduous process of syncing my phone through iTunes. So, now, it works, but I'm out an hour of effort and frustration.

A few observations:

(1) Some economists would point out that the "rational" course of action would have been to just buy the song again, as 99 cents is much cheaper than the frustration of fixing the problem. Incidentally, these same economists are morons.

(2) We really don't have much leverage with companies, do we? I can say whatever I want, but my threat to boycott Apple is an empty one. There's nothing close to the iPhone on the market, as far as I'm concerned.

(3) In theory, we're all better off if companies can charge different customers different rates, based on the cost of providing services to them. (I made this point earlier when talking about airlines.) It's probably good that the people who contact customer service all the time should pay more than the people who don't, but it's just so enraging when the product doesn't work and — oh, guess what? – you have to pay the company to tell them about it.


Millsy said...

"In theory, we're all better off if companies can charge different customers different rates, based on the cost of providing services to them."

I'm not sure this is accurate, as the people who cost $100 to provide the service would not be better off. Price discrimination is pretty ambiguous in general (though, I'm on the side that you seem to be in thinking it's good in total welfare terms).

Usually the discussion of price discrimination talks of 'willingness to pay' rather than 'cost of services', no? Those who buy airline tickets closest to the time of flight are usually on business and don't bear the costs (the company does), therefore they can charge more. Those who buy far ahead of time are family vacationers looking for the best rate. I don't think the cost changes, as the flight is scheduled and the cost is fixed.

Here, too, I think price discrimination is more along the lines of a 'willingness to pay', rather than a cost of service. The support staff is already there and the 1-800 number is likely paid in a non-per-minute basis.

There could also be an externality argument, in that if they charged you your willingness to pay, the phone lines would be clogged for those willing to pay more (less), and the customers being helped would not always be the highest valued customers, or the ones who are in most need of the service.

Also...I'm sorry about your iPhone.

Greg Finley said...

You are right about the airline example. And, yes, price discrimination usually has to do with "willingness to pay."

The easiest way to ensure that resources go to their highest-valued uses is to price them.

While there may be fixed costs to hiring a support staff and setting up a help line, the dynamic can vary depending on whether customers must pay. If tech support costs money, Apple can provide better customer service with the same size staff, or the same level of service with a smaller staff.