February 14, 2013 in Daily Bulletin
Derek Thompson looked at the economics of greeting cards:
- The premium paper that card makers use is expensive…and is getting more so. Workers in China who help print out the cards are also beginning to demand higher wages.
- There isn’t much competition. Two companies control 90% of the market and their relationships with retailers and suppliers prevents other entrants to the market.
- E-cards are threatening the industry and cardmakers are now experimenting with gimmicks such as a $20 card with an LCD screen that displays a 50 photo musical slideshow.
- The biggest reason though, is that consumers are willing to pay. Of the $20 billion we spend on Valentine ‘s Day only 4% goes to the card. Compared to the overall cost of the occasion, the cards are a bargain.
Read more about ‘value cards’, the various teams that come together to make a card, and some notes about the psychology of using high prices over here.
Source: The Atlantic