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May 10, 2007

Price Transparency in the Wedding Industry

Because I'm a bit of an odd guy, I have an abiding interest in differential pricing: How the poor pay more for the same products than the rich, how the uninsured pay more for the same care than the insured, and so on. Now I can add how the median limo-lover pays less for the same kickin' ride than the betrothed. Granted, this is a less pressing problem for social policy wonks than the other two, but still: Where's the outrage!?

May 10, 2007 | Permalink

Comments

How about wedding cakes? I mean a box of Betty Crocker goes for about three bucks and a can of frosting two. Have you ever seen a wedding cake for under $500?

Posted by: cheflovesbeer | May 10, 2007 3:09:37 PM

Old story. Not that it isn't one worth reporting but when I got married back in 85, we did all our own work on it. Every vendor I called had the same question, "Is this for a wedding?" and when I checked into, yes, they charged weddings more. I eventually just stopped being frustrated by it and went with it. What other choice do I have?

That said, I've noticed something else you might enjoy Ezra. Have you ever noted that the better off, the ones with private corporations get all kinds of financial benefits therefrom that go directly to their personal lives that private citizens do not have. And please, no one start arguing about what's proper and what isn't. I've seen it in three different states with more than half a dozen companies. Whether it's corporate ownership and registration of vehicles, property, the ability to deduct vacations, it's a wonderful of benefits out there that folks of marginal means can't even dream of.

And I don't even know that I"m advocated for this to be changed. I do think it is worth noting there is yet another tier of benefits folks with "more" enjoy that folks with less never get.

Posted by: ice weasel | May 10, 2007 3:11:52 PM

Some percentage of people buying stuff for weddings are spending someone else's money (i.e., their parents). So it should not be surprising that wedding vendors try to exploit the lower price sensitivity of such consumers. It would be interesting to know if there are some vendors who try to price discriminate between self-financers and parent-financers.

Posted by: henry evans | May 10, 2007 3:29:07 PM

Both the NY Times article and the recent Slate article say that the average wedding costs something like $29,000. How can that be true?!? That seems like a lot more than the average couple/family can really afford to spend. I realize that there are a number of wealthy people who spend orders of magnitude more than that which drives up the average figure, but still. $29,000!

Either that figure comes from the "Wedding industry" (that there exists such a thing is ridiculous) and is vastly inflated because they want to convince as many brides as possible that if you spend less than $29K, you're missing out --- OR a lot of people are spending way, way too much on their weddings.

$29,000! You could buy a boat for that. Or one of the low-end Jaguars. Or a big down payment on a house. Or a trip around the world. Or Jesus, go on an eBay spending spree. A wedding is over in one day! And you're probably just going to get divorced anyway!

Posted by: Jason | May 10, 2007 3:32:58 PM

It's well known that the minute you say "wedding" any price quote you get increases significantly. Not just limos, ANYTHING.

Posted by: fiat lux | May 10, 2007 3:47:19 PM

@jason -- it's not $29,000 in one big chunk, the money gets spent in bits and pieces over the course of many months.

Posted by: fiat lux | May 10, 2007 3:56:52 PM

$29000 doesn't sound that bad. Apparently the "average wedding" has 150 guests, so you're talking about $200/head.

This is also one of those things where "average" is highly misleading, and the distribution is very important. I feel like the median wedding probably has fewer than 150 guests. So the median wedding is ... let's say ... $20000. They're also including the ring in the cost of the wedding, which is a little odd.

But yeah, the price discrimination in weddings is just crazy.

Posted by: Nicholas Beaudrot | May 10, 2007 4:06:08 PM

The outrage gets is absorbed to wedding planners, who through ultrasonic pressurization turn that outrage and the wasted energy of bridezillas everywhere into pretty, pretty flowers.

Posted by: diddy | May 10, 2007 4:10:39 PM

Nothing says "single" like a naive guy asking if companies charge more for weddings - hell yes and just ask any bride. Or her gay friend. :)

I used to do meeting and conference planning, and let me tell you, hotels and halls will practically give away the room and the food to companies looking to hold meetings in their spaces, and any catering manager will tell you that they do it on the backs of weddings (and bar mitzvahs, by the way).

Whether it's fair or not is debatable, but at the very least, it has everything to do with naivete - most couples/families aren't in the conference market the way meeting planners are (if you want any kind of leverage, find a meeting planner friend to help), and have little real way to evaluate what they're being told about room, food and beverage prices. Weddings are also (essentially) one-off events; you can get return business from a corporate event planner (hell, you'll probably score a couple of weddings even), but the Smith-Feinberg wedding probably yields no immediate dividends (except maybe a bridesmaid or two with their own plans).

So like everything else, it's economics. The real scandal here - pace Ezra's earlier comments on the Silve Palate - is the new sense of "classiness" that has people with no real business spending small fortunes on weddings doing it anyway. The wedding market is madness, but it's our nuptial obssessed culture making a fetish out of big, overstuffed ceremonies that's the bigger problem.

Posted by: weboy | May 10, 2007 4:17:27 PM

My advice to people planning their wedding is to negotiate prices.

And don't worry about it if you forget to give every guest a little knick-knack memento, or you use a plain knife to cut the cake, etc...

Posted by: American Citizen | May 10, 2007 4:22:50 PM


Ezra is actually making a much more serious point than the commentators seemingly imagine. The extremely widespread wedding-related price discrimination is simply not justified by neoclassical economic theory. The wedding industry is now a huge one, and limo driving and rental isn't precisely the hardest industry to get into. There are no massive barriers to entry. So, when a competitor openly announces that wedding-related limo use is xx% higher priced for ludicrous and valueless extras, and simply refuses to do wedding business at the lower price, why aren't other limo companies jumping in to take advantage of this?

Clearly, the higher wedding-related prices are far above that of supplier costs (the much lower non-wedding prices probably aren't that much above cost). Competitors should be lining around the block to undercut what is essentially unearned profit.......but, they aren't (in fact, after investigation, I'll bet you find that everybody's simply setting wedding prices to nearly equivalent levels). Again, something is really quite wrong with neoclassical economic theory here.

Posted by: burritoboy | May 10, 2007 4:39:28 PM

it's not $29,000 in one big chunk, the money gets spent in bits and pieces over the course of many months.

$29000 doesn't sound that bad. Apparently the "average wedding" has 150 guests, so you're talking about $200/head.

Okay, but that doesn't change the fact that you're shelling out 20 or 30 thousand dollars for a one-night party. That's a crazy way for anybody to spend money unless they are truly rich.

A year after the wedding, aren't you going to wish you had a lower house payment, or another car, or a bunch of nice furniture? Instead all you have is some nice pictures, and the memory of that one night. And again, keep in mind that there is a 50% chance that memory will end up being a painful one.

(I'm assuming that most people who are divorced do not look back pleasantly on their wedding day. I'm sure there are exceptions - but there are also people who are still married who probably want to cry every time they think about their wedding day.)

I've noticed a lot of Econ-minded folks arguing lately that getting more education isn't always the wisest thing to do. But damn, for the cost of a wedding, you could attend MIT for a year.

Posted by: Jason | May 10, 2007 5:02:20 PM

I've noticed a lot of Econ-minded folks arguing lately that getting more education isn't always the wisest thing to do. But damn, for the cost of a wedding, you could attend MIT for a year.

But the big ticket items are food and rent ... ignoring the ring, everything else is just noise. So it's a question of how well you want to feed people, how many people you're going to invite, and what sort of entertainment you'll provide. I mean, even at $80/head things add up fast. It just feels like a lot of money because no one ever throws parties this big that aren't their weddings. I mean, some 40th birthday parties probably got expensive, but not five figures expensive.

And again, keep in mind that there is a 50% chance that memory will end up being a painful one.

One can get divorced and still enjoy parts of marriage. Also that's the crude divorce rate, which includes people divorcing their second spouse ... the divorce rate for first marriages is about 40%. For couples where the wife has a college education, it's 16%.

Posted by: Nicholas Beaudrot | May 10, 2007 5:18:36 PM

Spending a lot of money on a wedding makes somewhat more sense within an extended family that reciprocates. In which case everybody gets not just one single party, but a series of parties where sooner or later each person/family takes a turn picking up the tab. In this context, spending $30k makes at least marginally more sense than it would without reciprocity. I wonder what the average ratio of weddings attended/weddings funded is.

Posted by: henry evans | May 10, 2007 5:22:02 PM

burritoboy - It's a lovely theory, but weddings behave more like luxury items than basics; hence, while anybody can get into, say, limo driving (and in some ways, they can't), there's absolutely no downward pressure on pricing - everyone is in it to gouge the bride and her parents, so it's the ceiling that's in play, not the floor. Saying "I have the cheapest limo business in three counties" implies that a) if the bride picks you, she's cheap, b) cuts into your profit margins and c) does not increase your snob appeal. What does - and what happens most often - is that some people offer some "discount" off the card rate that gets passed around by word of mouth (but is still an arm and a leg over, say, getting a car to the airport).

I love that people find the $29,000 average appalling, but gee whiz, you're late. This insanity has been in place for years, and is really only getting worse. The stuff I hear from recent college grads/new office workers (the prime time of weddings) would curl your hair (or the bride's for $250... shades of John Edwards). Bookings two to three years in advance; insane prices; loans... it's a horror show, people, and in case you haven't noticed, it's one that the media, which loves to sell young people, especially women, on a fantasy of true love and hetero norming (where gay weddings make a cute - and expensive - side note) sells in every way possible. Have you been completely ignoring that mess every year on the Today show where they over arrange some poor couple's wedding and then hold it on TV???!!! It's madness, I tell ya, madness. And we're all buying into it. And the madness doesn't stop until we both ratchet down our consumerism, and stop railroading young couples into foolish and expensive ceremonies that, as many people, may well prove meaningless given today's divorce rates.

Posted by: weboy | May 10, 2007 5:41:35 PM

One wonders if the limo companies have a surcharge price for limos used for funerals (with a recorded bagpipe amplified all through the procession, not just at corners)?

Or do the funeral directors have a corner on the limo market for burials?

Maybe the limo market is distributively owned by the Soprano guys, and price competition comes at the cost of broken kneecaps or concrete shoes.

Posted by: JimPortlandOR | May 10, 2007 6:07:34 PM

Chef
Are you kidding? Betty Crocker? Well Lah dee dah, Mr. Big Spender. That overpriced harlot has nothing on Ho-Ho's. Three for $.75. And Sno-balls.

Posted by: RW | May 10, 2007 6:10:45 PM

What does - and what happens most often - is that some people offer some "discount" off the card rate that gets passed around by word of mouth (but is still an arm and a leg over, say, getting a car to the airport).

Right. As you point out, the "sticker price" has to be high for these items. However, the large number of businesses hoping to cash in on the wedding business means that the price is almost certainly negotiable for many services. One could even make a call for competitive bids.

At the same time, weboy is pointing out that you can't "go cheap" because you're effectively "putting on a show." This means that to get the most bang for your buck, the bride and groom would be advised to focus on spending money on the food and the dress and finding a pretty reception site, because that's what guests will be focused on the most. The utility of spending extra money on the limosine or a commemorative DVD of the event is much lower, because guests will be less inclined to comment on such things.

On that note, seriously, I'd never have a wedding in which my guests weren't well-fed. I appreciate small, modest weddings of only close friends and family, but when I hear people say, "and we just had some cold cuts and snacks for everyone," I can't help but think, "is this how you treat your guests?"

Posted by: Constantine | May 10, 2007 6:48:39 PM

I've noticed a lot of Econ-minded folks arguing lately that getting more education isn't always the wisest thing to do. But damn, for the cost of a wedding, you could attend MIT for a year.

With some hefty financial aid/student loans/part-time job, you mean.

[/bitter college student]

Posted by: Isabel | May 10, 2007 7:44:56 PM

WRT the $29,000 for a wedding, it's worth noting that at most weddings, the couple will get back some significant percentage of this money in the form of wedding gifts, which are usually semi-practical household items. The couple or the parents pay for a big party, and all the guests provide practical items (or perhaps even money) in return.

Posted by: John | May 10, 2007 7:56:42 PM

The extremely widespread wedding-related price discrimination is simply not justified by neoclassical economic theory.

Well, there's Vegas, and my sense is that there's a genuine market at work when it comes to Vegas weddings, or wedding-chapel weddings in general. But having that kind of wedding is more like opting out of a 'the wedding market' than participating it at a particular level.

On ice weasel's comment, I'd like to know the inflexion point at which one ceases to pay through the nose and become a beneficiary of freebies from companies who seek to benefit from the publicity.

Posted by: pseudonymous in nc | May 10, 2007 8:20:55 PM

"everyone is in it to gouge the bride and her parents, so it's the ceiling that's in play, not the floor. Saying "I have the cheapest limo business in three counties" implies that a) if the bride picks you, she's cheap, b) cuts into your profit margins and c) does not increase your snob appeal. What does - and what happens most often - is that some people offer some "discount" off the card rate that gets passed around by word of mouth (but is still an arm and a leg over, say, getting a car to the airport). "

Er, but that's my point. It's hard to see how guests at your wedding would think you're cheap for getting a cheaper limo ride - it's the EXACT same car (except the damn thing doesn't play wedding music). You can call it a luxury good (or more technically, a Giffen good, a good who's demand slopes upward as prices increase), except that:

1. we're running into a huge number of Giffen goods, to the point where some increasing percentage of the economy is behaving contrary to normal goods (downward sloping demand curves). Making neoclassical economic theory much less applicable.

2. are limo rides really luxury goods? After all, there are only a limited variety of makes of automobiles used for limos, they're hardly unique or even uncommon vehicles. There are a few unusual custom vehicles, but most limos are very similar to most other limos. You don't get any status boost by.......arriving in a vehicle playing wedding music versus arriving in the same vehicle playing no music. Typically, Giffen goods were theorized as quite unusual, fairly rare true luxury items, not something you can get for $500 for 4 hours.

Posted by: burritoboy | May 10, 2007 8:34:23 PM

are limo rides really luxury goods?

In general, no. However, from the original article, the specific kind of limousine service requested was a

"22-passenger excursion in a long, white stretch limousine"

which sounds more like a bar-on-wheels than a simple 6-passenger limo. Something like this is going to be offered by a limited number of providers to the few customers that want such a thing. Playing off weboy's point that this reflects a new sense of "classiness" the people demand/expect from weddings, this sort of limousine is a case where "classiness" is being mistaken for simply "expensive," which I think makes it likely to be a Giffen good. These sorts of limousines are signs of profligate spending. If they weren't expensive, those who wished to flaunt their wealth would opt for other kinds of expenditures, and there would thus be much less interest in 22-passenger limousines for these special occasions.

Posted by: Constantine | May 10, 2007 9:17:47 PM

You'll get no argument from me that this stuff makes no sense - my sister's wedding was a small dinner for 20 in her apartment. But like the prom market, this demand for limos is about attainable luxuries for pretend princesses. You can turn anything into a status item if it is perceived to be exclusive. And while I only have a hazy understanding of Giffen good theory, that's really not what I mean - I am really thining more about my retail background and the notions of exclusivity; and the wedding market is all about perceived exclusivity. So yes, you do get a status boost from the (I'd call it tackiest) most luxurious ride imaginable. And you'd pay what it takes to get there. Makes no sense? Perhaps, but that strikes me as a key part of what perceived status items are all about.

Posted by: weboy | May 10, 2007 9:19:32 PM

As someone who's 10 years into her marriage, I gotta say, yes, having a big formal wedding was worth it. It was a fantastic day where 160 of our friends and family were all together and happy. The genuine smiles on everyone's faces still gives me great pleasure when I look at the pictures today.

Posted by: fiat lux | May 10, 2007 9:34:32 PM

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