How Much Can You Charge?

March 30th, 2007 by Bob Bly

When you set your product prices or service fees, do you consider only what price is going to make you the most money?

Or does the idea of whether the price is fair and reasonable — and whether people can afford it — play a role in your pricing.

Reason I ask: an article in The Week (4/6/07, p. 13) reports that Halliburton billed the federal government $27.4 million for a shipment of natural gas from Kuwait that cost the company $82,000.

According to the article, Halliburton claimed the extra charges were justified by the danger of transporting gas over Iraq’s sniper-infested, booby-trapped roads.

Do you think Halliburton is:

A. Being fairly compensated for the risk involved?
A. Price-gouging?
B. Ripping off the American government and people which, given its White House connects with Dick Cheney, should be investigated with an eye toward prosecution?

And the bigger picture question: can pricing for a product or service be so high it becomes at best unseemly or at worst downright immoral?

If so, at what point does that occur?

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This entry was posted on Friday, March 30th, 2007 at 2:20 pm and is filed under General. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

10 responses about “How Much Can You Charge?”

  1. Sean D'Souza said:

    We’re not talking ‘competition’ here, are we? Of course, in this case it’s plain immoral.

    It boils down to a counter-question.
    Would you, knowing what you know about this company, then hire them?

    There’s a difference between price and value. There’s no value in this example at all. It’s plain price-gouging. And only being done, because they can get away with it.

    You can indeed charge an obscene sum of money in your business or with your products. We’ve seen that a painting can go for millions of dollars. But hey, there’s value. There’s competition. And yes, someone will indeed (in most cases) buy that painting at a higher price.

    Where’s the value with Halliburton?
    Where’s the competition?
    Where’s the even remote chance than someone would buy their services again at that price?

    Well, at least they get to laugh all the way to the bank. :)

  2. Matt Geier said:

    Knowing the federal government procurment system and how many doors there are to go through and the red tape to cut into, for some reason I’m not surprised.

    In my initial thinking, the government is always looking for bottom dollar prices and prices that are “cheap.” I’ve talked to 100′s of federal government procurment offices and individuals from Aquisition to Engineering. They all tell me how they are always cost driven and how they always look for the cheapest buck for their bang (if that makes sense). In other words, they always want more for less. Then again, I do to.

    That brings me to the point of who else put in a bid on the RFP/RFQ from the government? Were they all higher then $27.4M? I mean seriously, they say it only cost 80K to move the fuel. You would be surprised to know how much the government doesn’t do their research, but, just “accepts” their information from “contract holders” “Incumbants” etc…. the people they’ve done business with on many occassions.

    I think the question should be raised, how many tax dollars go out the door to these companies on a regular basis? And how much to those projects and program that we do not know about, those “classified” projects?

    Just my $0.02

    Matt

  3. Jodi Kaplan said:

    As I understand it, many of these contracts were no bid, no questions, no nothing. These are also the same scoundrels who were in charge of maintenance at the infamous Building 18 at Walter Reed. As a taxpayer, I want an investigation and I want my money back!

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