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"Drama Pricing":

A ridiculous euhpemism. For an explanation, click below. Examples of other ridiculous euphemisms are welcome in the comments.

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BT:
There you go again David, talking about the real estate market. Can't wait for the posts accusing you of single handedly driving down the Boston real estate market. (:
Business has its share of stupid euphemisms like one a friend used years ago, penetrating pricing. I think this was before Kathrine McKinnon hit town.
7.17.2006 7:53pm
David Chesler (mail) (www):
Yes it might help. For the same illusory 50K that I'm not getting, instead of admitting I didn't make such a good investment after all, I'm getting to make a statement, dramatically.
7.17.2006 7:54pm
JohnAnnArbor:
"Certified pre-owned" is a really annoying euphemism that's caught on, unfortunately.
7.17.2006 8:06pm
RonMexico:
What's wrong with "certified pre-owned"? I don't think "certified" is meant to modify "pre-owned." I think it's more along the lines of "certified, pre-owned" to where both are separate adjectives describing the car. Yes, it may be pre-owned, but it is also certified--which is likely a meaningful term (I assume that it connotates no body work done, having been looked over by the dealership's maintenance department, etc.). But I could be completely wrong...
7.17.2006 8:10pm
KeithK (mail):
It's the "pre-owned" bit that's ridiculous to me. You're buying a used car. Get over it.
7.17.2006 8:15pm
DNL (mail):
David, you're in the minority. This euphemism is a great idea.

"We have to cut your asking price 10%. It's just too high and won't sell for that amount."

OR

"I think you should cut your asking price 10%. We call it 'drama pricing' -- it adds such a shock to the buyer that they can't help but come look."

The former is akin to saying "you're nuts" and/or "there's something wrong with your house." No one wants to hear that.

The latter is the agent saying doing what any good salesman does -- convinces the customer that they need the product because it makes everything better.

If you saw that comparable houses were going for 300k, and your agent wanted you to go to 270k, you'd fire them and go with the guys that were listing the similar houses at "market" value. But the agents that use the spin are, in effect, giving you something for your 30k -- they're giving you a dramatic effect!
7.17.2006 8:24pm
Mike M (mail):
"Drama pricing" would be a good idea if accompanied by "drama commissions."
7.17.2006 8:25pm
Steve P. (mail):
Michael Vick -

I actually have JohnAnnArbor's reaction to 'certified pre-owned' as well. Since 'certified' is such a vague term (who was it certified by? What for? Are the reputable?) I get the feeling it's just to put a meaningless modifier on 'pre-owned' and pull the wool over the general public's eyes. So far as the 'pre-owned' goes, that's blatantly stupid. Put the two of them together, and I have to leave the room.
7.17.2006 8:35pm
Ming the Merciless Siamese Cat (mail):
If you saw that comparable houses were going for 300k, and your agent wanted you to go to 270k, you'd fire them and go with the guys that were listing the similar houses at "market" value.


Yes, if I saw that comparable houses were selling for 300K, I'd fire the agent who advised me to sell for 270K. On the other hand, if I saw that comparable houses priced at 300K where languishing unsold, I'd be happy that I found an agent who understood the market value of my house was actually 270K. Unless that agent tried to feed me a cock-in-bull line about "Drama Pricing", in which case I'd fire her for treating me like an idiot.
7.17.2006 8:52pm
Scott Wood (mail):
Well, the "certified" part implies an extended warranty (frequently to 100,000 miles) and some degree of dealer maintenance. So it's actually informative.

"Pre-owned" vs "used"? Eh. --sw
7.17.2006 9:34pm
Bob Woolley:
I think the modern euphamism that annoys me most is "invest." Politicians these days never want to "spend" money--they only want to "invest" it. We need to invest in education, in child-care programs, in our seniors, in roads, in jobs-training programs, etc. Now, any of these items may or may not be a worthwhile expenditure of public funds. But they ain't investments. When I invest money, I expect to have more of it returned to me at some future date. When politicians want to "invest" my money, however, there's no way I'm getting it back with interest later. It's just plain gone.
7.17.2006 9:47pm
Bob Woolley:
I think the modern euphamism that annoys me most is "invest." Politicians these days never want to "spend" money--they only want to "invest" it. We need to invest in education, in child-care programs, in our seniors, in roads, in jobs-training programs, etc. Now, any of these items may or may not be a worthwhile expenditure of public funds. But they ain't investments. When I invest money, I expect to have more of it returned to me at some future date. When politicians want to "invest" my money, however, there's no way I'm getting it back with interest later. It's just plain gone.
7.17.2006 9:47pm
Steve P. (mail):
I stand corrected.
7.17.2006 9:52pm
Malvolio:
I plan to pay a commission of 12% on the sale price -- minus half the asking price. If it sells at asking, the commission will work out at the customary 6%. Drama pricing will produce a commeasurately dramatic drop in commission though.
7.17.2006 10:36pm
Cornellian (mail):
Drama pricing is what you have to pay to hire Vinnie Chase's brother - not very much.
7.17.2006 10:38pm
ras (mail):
Whew, I just got back from Wal-Mart. The drama, the drama!
7.17.2006 10:55pm
RonMexico:
I was focusing on the phrase "certified pre-owned", which distracted me from the fact that "pre-owned" is perhaps the most hilarious phrase in modern advertising. Unless it's meant to abbreviate "previously owned" it makes no sense whatsoever (and, in all likelihood, it is the latter).

Cornellian--funniest post I've seen all day
7.17.2006 11:02pm
JRL:
Well, I recently (April) did this on my own iniative. I priced my house below market value so as to attract a lot of interest in hurry and get into a competitive bid situation. It worked exactly as planned. I was in contract for significantly more than the asking price in less than 2 weeks. This was in contrast to an identical house that was for sale across the street that languished on the market for 4 months, enduring 4 price drops in the process. They ended up selling for almost exactly the same price as us.

I was confident as to the current market value of my house and its competitive position in the market. If you don't know the market (or your realtor doesn't know the market) you could really cost yourself.
7.17.2006 11:48pm
JRL:
I forgot to mention that the other house priced 'aspirational' -- i.e. above-market.
7.17.2006 11:50pm
cathyf:
When politicians want to "invest" my money, however, there's no way I'm getting it back with interest later. It's just plain gone.
To be fair, some government spending is an investment. Things like roads, or weather forcasting, or other investments in public goods might indeed pay off to me with a positive (and quite competitive) return. Being a woman and the mother of a daughter, I place a rather high value on us not being forced into burkhas and not having our genitals hacked off. So when I see my tax money going to kill Islamofascists I think I'm getting an excellent return on my investment there, too.

cathy :-)
7.18.2006 1:06am
Lev:
Speaking of pre-owned vs. used, when did "in danger of" become "at risk."
7.18.2006 1:33am
Lev:
It seems to me that if one is selling his own house, "drama pricing" can make a lot of sense, but if using a realtor, it accomplishes the realtor's first goal, which is sell it fast, and not necessarily the homeowner's goals, which are get the best price and sell it in a reasonable period of time. I think that Freakonomics book had an analysis of incentives etc. on house sales.
7.18.2006 1:37am
The Original TS (mail):
Well said, Lev. But don't get me started on real estate agents. They're an industry in search of an economic rationale.

Though pre-owned has always annoyed me, my vote for silliest euphemism is the "All You Care to Eat" buffet. They used to be "All You Can Eat" buffets but I guess someone got sued because they thought they had to stuff themselves until they were no longer physically capable of eating another bite . . . or something.
7.18.2006 3:50am
Avatar (mail):
Isn't this a fairly well-documented retail phenomenon?

Compare to Ebay, for example. The seller may set a "reserve price" higher than the initial bid; basically, you can offer items for bid at prices you have no intention of honoring. The idea is that people are more likely to take a look at something which is significantly discounted, and once they've taken that look, are more likely to form the sort of emotional commitment that will cause them to pay above-market prices for that item.

For houses, it goes like this... the discounted price draws in interest from several buyers. Some of those buyers are going to be rational, in that they have no intention of paying above-market price (or even market price, heh). However, if you have multiple interested parties, you can easily justify not letting the house go for the advertised value. Then those interested parties can bid up against each other, ultimately to a price they may not have considered when they were still searching the market. They're no longer bidding on "a house in a location they like" but "THIS house".

So why a dumb term like "drama pricing"? Easy - the agent has to sell the idea to the owners. However, he can't come out and say "I'm going to lie about how much we'll accept for the house in order to generate interest", even though that's exactly what he's doing. Thus, silly jargon term.
7.18.2006 4:42am
jallgor (mail):
I think drama prciing is a dumb name but not a dumb concept. The article doesn't explain it well but the posters here nail it. You draw people in and once they have put in an offer on what they think is a good deal many people will get emotionally attached and start bidding more than they would have paid otherwise.
When did DB start doing these real estate posts? I am pretty sure it was about 2, maybe even 3 years ago (is my memory off here?) that he announced on this blog that he was refusing to buy into the DC housing market because it was overpriced. It would be fun to do a hypothetical financial analysis of that decision a few years from now and see if he made the right move. Given the upward market movement since DB made that call a few years ago I imagine that even a reduction of 50% or more in housing prices will still find him on the losing end of the stick.
7.18.2006 9:30am
Aultimer:
Avatar has the agent's story right, but not the economic reality. They're hoping to appeal to the folks who wonder why they can't get a bidding war above asking price like their neighbor did twelve or eighteen months ago.

Sure, people do "fall in love" with houses, cars, nick-nacks on ebay and the like, but in a cooler market flush with "inventory" (another bad term of art), the pressure just isn't there.

I'm sure that the "dramatic" agent, when confronted with a slightly-less-than-drama-price offer, cajoles the seller into taking it, full of seeming remorse about the failure of a bidding war to have materialized. The ebay seller has a reserve price to protect against such pressure.
7.18.2006 9:35am
Mr. T.:
I like "all you care to eat". It's more dignified.
7.18.2006 9:55am
Richard Bellamy (mail):
"Pre-owned" doesn't bother me. Sure, it's a euphemism, but it is at least an accurate one. The one that gets me is "lightly used". What is the difference between a "used truck" and a "lightly used truck"? Nothing. The used car salesman doesn't know if the previous owner was grinding the gears or not.

I don't have a problem with "drama pricing." If it draws in a bunch of people, and gets them to bid above the "drama pice" to the actual fair market price, then it's a better strategy than pricing at the actual fair market price and waiting longer for a single bidder, especially in a declining market where a house could be correctly priced today, but too high tomorrow, and you'd have to keep lowering.
7.18.2006 10:30am
KevinM:
"Drama pricing," it seems, is not just a euphemism for "priced at the market level (rather than above, in hopes of attracting the one bigger fool)" The realtor is recommending that you price the house so far below comparable properties that buyers are surprised and awed -hence "drama" pricing, rather than "realistic" pricing. Why the euphemism? The realtor is not loyal to the buyer or seller, but to the deal. The realtor wants it to go through quickly, preferably within a week or two, with a minimum of effort on the realtor's part; the seller is best served by a price just low enough to attract the most willing buyer within a reasonable period of time, say, six months. (Bidding should theoretically cause the two to converge, but it doesn't, except perhaps in the hottest markets. Among other things, asking price is a formidable psychological barrier for the bidder, who lacks information and believes that the house can't be worth more if even the seller doesn't think so.) anyway, "drama" pricing is designed to further the realtor's goal, as opposed to the seller's. If a sale occurs quickly and easily, the realtor's avoided opportunity cost more than makes up for the .06 x (best price minus drama price) that the realtor stands to lose. The seller, who is in the market for just this one sale, has no opportunity cost to consider, and bears the brunt of the difference.
7.18.2006 11:21am
KevinM:
P.S. re: "pre-owned." For me the reason it's so funny is that the dealers make it sound like a service they provide, like undercoating. "Best of all, you don't even have to take ownership; we've already done that for you!"
7.18.2006 11:24am
BT:
One of the other aspects of below market pricing, or drama pricing if you prefer, is that the smart buyer will ask himself, What's wrong with this house that it is priced so far below other similar properties that are currently on the market? It may make the property suspicious in the eyes of some.
7.18.2006 11:44am
R:
No one's better with euphemisms than George Carlin:

I don't like words that hide the truth. I don't like words that conceal reality. I don't like euphemisms, or euphemistic language. And American English is loaded with euphemisms. Cause Americans have a lot of trouble dealing with reality. Americans have trouble facing the truth, so they invent the kind of a soft language to protest themselves from it, and it gets worse with every generation. For some reason, it just keeps getting worse. I'll give you an example of that. There's a condition in combat. Most people know about it. It's when a fighting person's nervous system has been stressed to it's absolute peak and maximum. Can't take anymore input. The nervous system has either (click) snapped or is about to snap. In the first world war, that condition was called shell shock. Simple, honest, direct language. Two syllables, shell shock. Almost sounds like the guns themselves. That was seventy years ago. Then a whole generation went by and the second world war came along and very same combat condition was called battle fatigue. Four syllables now. Takes a little longer to say. Doesn't seem to hurt as much. Fatigue is a nicer word than shock. Shell shock! Battle fatigue. Then we had the war in Korea, 1950. Madison avenue was riding high by that time, and the very same combat condition was called operational exhaustion. Hey, were up to eight syllables now! And the humanity has been squeezed completely out of the phrase. It's totally sterile now. Operational exhaustion. Sounds like something that might happen to your car. Then of course, came the war in Viet Nam, which has only been over for about sixteen or seventeen years, and thanks to the lies and deceits surrounding that war, I guess it's no surprise that the very same condition was called post-traumatic stress disorder. Still eight syllables, but we've added a hyphen! And the pain is completely buried under jargon. Post-traumatic stress disorder. I'll bet you if we'd of still been calling it shell shock, some of those Viet Nam veterans might have gotten the attention they needed at the time. I'll betcha. I'll betcha.

But. But, it didn't happen, and one of the reasons. One of the reasons is because we were using that soft language. That language that takes the life out of life. And it is a function of time. It does keep getting worse. I'll give you another example. Sometime during my life. Sometime during my life, toilet paper became bathroom tissue. I wasn't notified of this. No one asked me if I agreed with it. It just happened. Toilet paper became bathroom tissue. Sneakers became running shoes. False teeth became dental appliances. Medicine became medication. Information became directory assistance. The dump became the landfill. Car crashes became automobile accidents. Partly cloudy bacame partly sunny. Motels became motor lodges. House trailers became mobile homes. Used cars became previously owned transportation. Room service became guest-room dining. And constipation became occasional irregularity. When I was a little kid, if I got sick they wanted me to go to the hospital and see a doctor. Now they want me to go to a health maintenance organization...or a wellness center to consult a healthcare delivery professional. Poor people used to live in slums. Now the economically disadvantaged occupy substandard housing in the inner cities. And they're broke! They're broke! They don't have a negative cash-flow position. They're fucking broke! Cause a lot of them were fired. You know, fired. management wanted to curtail redundancies in the human resources area, so many people are no longer viable members of the workforce…

…And...and some of this stuff is just silly, we all know that, like on the airlines, they say want to pre- board. Well, what the hell is pre-board, what does that mean? To get on before you get on? They say they're going to pre-board those passengers in need of special assistance. Cripples! Simple honest direct language. There is no shame attached to the word cripple that I can find in any dictionary. No shame attached to it, in fact it's a word used in bible translations. Jesus healed the cripples. Doesn't take seven words to describe that condition. But we don't have any cripples in this country anymore. We have The physically challenged. Is that a grotesque enough evasion for you? How about differently abled. I've heard them called that. Differently abled! You can't even call these people handicapped anymore. They'll say, "Were not handicapped. Were handicapable!" These poor people have been bullshitted by the system into believing that if you change the name of the condition, somehow you'll change the condition. Well, hey cousin, ppsssspptttttt. Doesn't happen. Doesn't happen.

We have no more deaf people in this country, hearing impaired. No ones blind anymore, partially sighted or visually impaired. We have no more stupid people. Everyone has a learning disorder...or he's minimally exceptional. How would you like to be told that about your child? "He's minimally exceptional." "Oohh, thank god for that." Psychologists actually have started calling ugly people, those with severe appearance deficits. It's getting so bad, that any day now I expect to hear a rape victim referred to as an unwilling sperm recipient.

And we have no more old people in this country. No more old people. We shipped them all away, and we brought in these senior citizens. Isn't that a typically American twentieth century phrase? Bloodless, lifeless, no pulse in one of them. A senior citizen. But I've accepted that one, I've come to terms with it. I know it's to stay. We'll never get rid of it. That's what they're going to be called, so I'll relax on that, but the one I do resist. The one I keep resisting is when they look at an old guy and they'll say, "Look at him Dan! He's ninety years young." Imagine the fear of aging that reveals. To not even be able to use the word "old" to describe somebody. To have to use an antonym. And fear of aging is natural. It's universal. Isn't it? We all have that. No one wants to get old. No one wants to die, but we do! So we bullshit ourselves. I started bullshitting myself when I got to my forties. As soon as I got into my forties I'd look in the mirror and I'd say, "well, I...I guess I'm getting...older." Older sounds a little better than old doesn't it? Sounds like it might even last a little longer. Bullshit, I'm getting old! And it's okay, because thanks to our fear of death in this country, I won't have to die...I'll pass away. Or I'll expire like a magazine subscription. If it happens in the hospital, they'll call it a terminal episode. The insurance company will refer to it as negative patient-care outcome. And if it's the result of malpractice, they'll say it was a therapeutic misadventure. I'm telling you, some of this language makes me want to vomit. Well, maybe not vomit. Makes me want to engage in an involuntary personal protein spill.
7.18.2006 11:55am
Third Party Beneficiary (mail):
"I don't have a problem with 'drama pricing.' If it draws in a bunch of people, and gets them to bid above the 'drama price' to the actual fair market price, then it's a better strategy than pricing at the actual fair market price and waiting longer for a single bidder"

That was my exact take on it too. The goal of "drama pricing" appears to be to price the property below market value, draw in a number of interested buyers, and then trigger a bidding war that pushes the final sale back up over what the market price would have been. It could have just as easily been called "eBay pricing," but that probably would have resulted in a trademark suit.
7.18.2006 12:02pm
legally naive (mail):

I plan to pay a commission of 12% on the sale price -- minus half the asking price. If it sells at asking, the commission will work out at the customary 6%. Drama pricing will produce a commeasurately dramatic drop in commission though.

Does Malvolio's scheme get used in reality? This or an even more aggressive 24% on the sale price minus 3/4 asking price has always made more sense to me than the standard 6%.
7.18.2006 2:22pm
PGofHSM (mail) (www):
I don't understand why Bernstein is attacking the phrase "drama pricing" instead of what struck me as an even stupider phrase, "energy pricing." At least the word "drama" is so far out of the normal context of home-buying that upon hearing it, I assume I don't know how it's being used. "Energy," on the other hand, is a word that has a lot to do with home-buying, particularly with the high cost of heating and cooling homes today. When I glanced at the paragraph and saw "energy pricing," I momentarily assumed it meant pricing homes that consumed a great deal of energy at a lower price than otherwise comparable homes.
7.18.2006 3:17pm
markm (mail):
thanks to the lies and deceits surrounding that war, I guess it's no surprise that the very same condition was called post-traumatic stress disorder. Still eight syllables, but we've added a hyphen! And the pain is completely buried under jargon. Post-traumatic stress disorder. I'll bet you if we'd of still been calling it shell shock, some of those Viet Nam veterans might have gotten the attention they needed at the time. I'll betcha. I'll betcha.

On the other hand, PTSD is more accurate than "shell shock", or at least the "Post Traumatic" part of it is. I've seen 3 year old kids diagnosed with PTSD after being rescued from horrendous family situations, right here in this country. No shelling involved, but they're certainly suffering aftereffects after the trauma is over. I don't think telling their foster parents that the kid's odd behavior is due to shell shock would quite convey the right message. For the rest "Disorder" lacks in expressiveness, but "shock" might express too much. It sounds like something you ought to get over in a little while if it doesn't kill you right away...
7.18.2006 6:16pm
hunky dory:
Here's a useless euphemism: Rancher's Reserve. Trying to equate the "reserve" as a higher value connotation as it relates to wines, for example, with a totally different class of product, beef. It doesn't mean anything, they just try to get your attention by creating a related image you can identify with.
7.18.2006 9:37pm
David Chesler (mail) (www):
I generally remind my children, at buffets, that it's "All you choose to eat", not "All you can eat", because they do tend to take it as a challenge.

I also remind them of Chesler's Observation: Every restaurant is "All you can eat", but at most of them you have to pay more for the privilege. (And therefore we're not going to order it all now, or point to all the things on the dim sum cart, or overload our plates -- if we're still hungry, we can order more at that time.)

"Pre-owned" is worse than a euphemism. It takes away information. I assume General Motors used to own it, and that's why they charged the original buyer so much. We don't care how much it was owned, we care how much it was used.
7.20.2006 5:45pm