Price gouging – charging far more than it costs to deliver a service and make a reasonable profit – is becoming increasingly common in Britain. Here are a couple of examples; a few months ago I booked a consultation with a private doctor for a skin problem, (scabies!). The consultation cost GBP 95.00 – which is pretty steep, but doesn’t seem to me to be completely excessive for 20 – 30 minutes with a highly qualified professional. The price gouging came in with the blood test he recommended. It wasn’t essential – I guess that many people with scabies simply treat themselves and don’t have a blood test. It is a known condition with an effective treatment. On the other hand I can see why ordering a blood test if someone has a condition with mites in their skin is not medically unreasonable. (I felt I had a bit of blood poisoning). What was unreasonable was the GBP 295.00 for the blood test. I have no doubt at all that the true market price of such a blood test – would be about GBP 60.00.
Another example is Cambridge English. I need to get a notarised and legalised, (these are two separate processes), copy of a teaching qualification I have. Cambridge will provide a ‘Certifying Statement’, in effect a copy of my Certificate, for about GBP 50.00, which, again, seems quite high, but not extortionate. What is extortionate is the GBP 165.00 they charge for a solicitor’s signature, – the notarisation stage. I appreciate that a solicitor who can work as a public notary has not just popped out of the job centre. She has spent many years working hard towards this position. Even so; GBP 165.00 for their signature seems to me like daylight robbery. (Imagine how many they can sign in an hour x GBP 165.00!).
Both these are good examples of price gouging. People set prices based not on cost plus a reasonable amount of profit, but at a far higher level – perhaps three or four times the actual market price. How does it work? Surely the ‘free market’ means that this won’t work? Not so. Let’s consider both these as examples. In both cases I can get the same service at a much more realistic price. but I will have to hunt around a lot. In the case of the blood test it makes sense to get the blood test at the same clinic as where I have the consultation, than try to find another clinic and get a bus across town, and lose more of my valuable time. I could get my Celta Certificate notarised for, I would guess, about GBP 60.00 – but in this case there are some complications; I need to organise it from abroad and have it ready when I get back to the UK. I don’t have time to deal with paper forms and posting them off and so on. Price gougers take advantage of just this; life is complicated enough and in many cases people will simply surrender to the price gouging even though they know they are being stung, because if they didn’t, then life would be a constant series of hunting around – time consuming journeys and processes – for the actual market price. The ‘free market’ is a theoretical model; it works on paper, but in reality it doesn’t. It is not that the theory is wrong, but that the theory is an ideal which reality only vaguely approximates to.
One thing I like about Russia is that there is little to no price gouging. There is a certain amount of government control. For example; during Covid the PCR tests were available at about USD 20.00, whereas, of course, in the UK you could easily pay GBP 150.00 for a test.
There is something unpleasant about price gouging – the attitude of “let’s just hit people for a huge whack, because we can, and we know the alternative is such a pain for them, enough will succumb to make us rich”. It seems to be missing something.