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ON A RECENT VISIT to the U.S. from our home in Spain, I used one of my last days to do some shopping, including purchasing a new laptop power cord to replace one that failed the night before. I have a Dell computer, so I entered the store confident I could easily buy a cord tailor-made for my brand.
“We only sell universal power cords,” the clerk told me.
“I don’t need to power the entire universe, just my Dell laptop,” I replied.
The clerk then enthusiastically explained that the power cord they sold came with nine replaceable power tips, so it could be used on any model laptop. It also cost $50.
“You don’t have a cord for just a Dell?” I asked.
“No, but this does them all. It can power up all your laptops.”
I then explained that, like most laptop users, I only had the one.
“So what happens if you get another from another brand?” The clerk relentlessly kept selling.
“Laptops all come with power cords nowadays,” I replied, revealing my long-held expectation that, with every electronics purchase, you also get the method for powering it.
In the end, however, I needed the cord, so I paid and left.
Hoping to forget the sticker shock from what, up until now, had been the least interesting part of my computer, my wife and I went to one of our old neighborhood Italian restaurants for lunch. When we got there, however, we were again sticker-shocked. Maybe it’s that we have been paying euro prices for almost a year, but lunch was $12 per entrée. In Spain, that amount could easily get you two meals. Yes, the portions were huge—my chicken parmesan was a breast and a half—but the price was still a bit of a surprise.
As we drove home, my wife (the financial mind) and I (the economics guy) talked about all the big prices we were seeing in the States. Then I said a single word: bundling. My wife silently nodded, and we both shook our heads in tandem at the pervasiveness of this insidious trend.
For those unfamiliar with the term, bundling is when a seller appears to give buyers a good deal by offering more while charging less than if the items had been bought separately. Want the tennis cable TV channel for $5 a month? You have to buy the “country club package” that gives you both the tennis and golf channels for $7.50.
It’s a good deal, unless you really don’t want the golf channel, in which case you’re stuck paying $2.50 extra for something you don’t use. Sound like a small cost? Bundles can add up fast.
An internet search showed I could have gotten a Dell-only charger for under $20. But since I didn’t have the luxury of time to await delivery, I had to splurge for a power cord that would charge not just my laptop, but every computer in the neighborhood. Neither I nor my diet-advising wife wanted me to eat so much at the Italian restaurant. Yet there lay the huge meal on my plate, daring me to consume it all and then remain awake and productive for the afternoon.
Some might ask why this is a problem, given that we do seemingly get extra value for the extra money. It’s true bundling often works to our advantage, such as phone plus internet packages, or even the jumbo pack with the extra rolls of toilet paper. Bundling, however, can also have cumulative negative effects, both for individual consumers and for society at large—for three reasons.
1. Wasting resources. Bundling seems innocuous, because most times what’s thrown in isn’t scarce. But consider how often those “extras” end up in the trash. You need a flapper valve for your toilet, so you buy the entire toilet repair kit and toss most of it away. Many people will use more paper towels to clean the same spill if they have extra rolls in the pantry.
Those little bits add up. We’re quickly facing a landfill problem from all the accumulated waste. Even worse, it was reported last year that Americans waste about a pound of food per person per day, even while many go hungry.
2. Overconsumption. If you don’t want to waste that extra portion of served food, you might take it home for later. Or you just go ahead and eat it right away, waistline be damned. America is truly a consumer society, even if that consumption hurts our health. And while food bundling strains our belts, large-ticket bundling strains our ability to save for retirement.
In 2003, when my wife and I were searching for a home in a good school district, we were shown mega-houses that came with two or three family areas (never mind that having separate sitting spaces defeats the entire notion of a “family area”), plus other amenities (saunas, pools, extra-large bathrooms) that we really didn’t need, but which were bundled together at luxury home prices. We certainly didn’t want to commit to a long-term mortgage for bells and whistles we weren’t planning to use. Yet it was harder to find a less expensive “basic” home than a tricked-out one.
3. Pricing people out. When home shopping, we held out until we found a fixer upper that was near a good school. We were lucky. Many others want to give their kids an opportunity to go to a good school but can’t find housing they can afford.
People will justify bundling by saying nobody’s forcing you to buy the bundle. But often, it’s the only choice. Try asking Netflix if you can pay for just the movies you want to watch.
Bundling is also a reminder that it often takes money to save money. A buy-in-bulk store might offer three weeks’ worth of supplies for what a consumer would spend in two weeks—arguably a bargain. But if shoppers only have enough money to pay for each week as it comes, they can’t avail themselves of the bargain. There’s lately been demand by millennials, who are more likely to live alone, to downsize products and not offer savings only to those who buy in large quantities. Will that make any difference? We’ll see.
Jim Wasserman is a former business litigation attorney who taught economics and humanities for 20 years. His previous articles include Getting Played, The S Word and Applying Pressure. Jim’s three-book series on teaching behavioral economics and media literacy, Media, Marketing, and Me, is being published in 2019. Jim lives in Granada, Spain, with his wife and fellow HumbleDollar contributor, Jiab. Together, they write a blog on retirement, finance and living abroad at YourThirdLife.com.
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Bundling a power chord is akin to selling whole life as an investment to get the level term that you really needed. Also akin to the movie “Super Size Me”. In media and advertising and sales “Winter is (always) coming!”:)
Absolutely correct, Bill. No one is sure how old bundling is (“Sorry, Khufu, but our pyramids only come in packages of three”) but McDonald’s is credited with inventing the combo meal, designed to attach the high-profit fries and drinks to the more popular, but low profit, burger. The one unquestionably great and best bundled deal in my life, of course, was that in meeting and eventually marrying my wife, I got a fantastic stepson in the deal!
I always take home leftovers from the restaurant, but unfortunately that means I have to use one of their styrofoam containers. Tonight, I tried to bring some plastic cylindrical containers, but my wife did not let me.
Interesting concept. I had never thought of bundling outside of cable, cell phone and insurance products. I am rather weary of businesses attempting to up sell on accounts or add-ons that might be great once but I know I am not going to use.