February 22, 2017

“Isn’t it immoral to charge different prices for essentially the same work?”

Question: “Isn’t it immoral to charge different prices for essentially the same work?”

Short answer #1: “No.”

Short answer #2: “There’s no such thing as ’essentially the same work’ in a service business.”

Short answer #3: “You don’t price your work, you price the outcome.”

Short answer #4: “Who would decide whether a price was immoral?”

Short answer #5: “Huh... I never pegged you for a Marxist.”


Long answer:

The crux of the “pricing morality” question is the errant assumption one’s work is of the same value to everyone. This notion is patently absurd (and FWIW, stems from Marx’s debunked labor theory of value).

Under normal market conditions (e.g., the absence of deceit, coercion, monopoly, or price fixing) a price can’t be immoral, or even unfair. Yes, a price can be BAD, but in that case the client would simply reject it.

For example, Paul Rand (famous designer, now deceased) routinely charged multinational corporations seven figures for a logo design. He did the logos for ABC, IBM, UPS, Westinghouse, and many others.

Would it have been “immoral” for Rand to propose a million dollar logo design to a local pizza place?

Of course not. The question doesn’t even make sense.

The pizza place would simply reject Rand’s proposal. Morality has nothing whatsoever to do with it. A price is either profitable or unprofitable to the parties of the transaction. If it is not profitable to both parties, one or the other will reject it.