The Wiki Man

There are things we don’t mind paying for – and things we do

Take parking in central London. I wouldn’t do it more than once or twice a year

2 January 2016

9:00 AM

2 January 2016

9:00 AM

Here’s a challenge for film buffs: can anyone remember, from the entire canon of cinema and television, a single scene set in an underground car park in which something unpleasant or nefarious did not occur? Yet I still rather like them. By far the best car park in London is the one found underneath Bloomsbury Square, which is in the shape of a double-helix. This allows you to drive all the way down and all the way up again with your steering wheel in one position.

About once a year I park in the Mayfair car park at the bottom of Park Lane. I recently noticed that an annual season ticket for the car park is £3,900, which, provided you are happy to sleep in your car and wash in the nearby public toilets, makes it something of a bargain for central London property. I recently paid a fairly hefty £22 to park for three hours. On the positive side, if you want to look at spectacularly expensive cars, the Mayfair car park is a cheap alternative to visiting the Motor Show, and also gives you the mild thrill of visiting what is, following the closure of the Razzle Multistorey in Bexleyheath, the only car park in London to be named after a pornographic -magazine.

But the other reason I don’t mind paying £22 to park for three hours is that this is something I only do once a year or so. If I had to do this twice a week, the cost would drive me practically insane.

In mathematics, xyz=zyx. This isn’t true in pricing. Asking 100 people to pay £10 once a year is not the same as making one person pay £10 100 times a year.

The Italians have ingeniously solved this problem. I once asked an Italian colleague whether he found it a bit of a pain in Rome having to pay €4 every time he wanted a coffee.

‘If you are Italian,’ he gently explained, ‘They do not charge you €4. If you are a local, they charge you less.’

Every time my local town increases its parking charges, it involves a huge barrage of local complaint. I have never understood why they don’t placate the local voters by borrowing from the Italians — or from the principle of Amazon Prime. Why not just let me pay £10 a month, in return for which I can park for half-price in my local area? My hunch is that this would allow them to raise prices quite a bit for people out of town, while placating the local electorate and encouraging people to shop locally.

The only reason this practice has not been adopted is, I suspect, historical technological limitations, which caused parking spaces or train journeys to be charged in two stupidly extreme ways. One way was to pay the one-off price, which is too expensive for regular users. The alternative was to buy a season ticket, which encourages misuse, in that it provides no incentive to travel or park at off-peak times, or to avoid unnecessary use. The system of season-ticket pricing on trains, as the Campaign for Better Transport points out, is also ridiculously unfair to part-time workers.

Amazon Prime is an extraordinarily intelligent idea, in that it works in multiple ways. It is a ‘commitment device’, which encourages regular use of the service, since the more you use it, the more you save. But it is, I suspect, essential to Amazon’s ambitions. Paying for a next-day delivery once a month is fine. But there is no way you can get people to use a service more than a few times a month if they feel they are paying for delivery every time.

Again, xyz does not equal zyx.

Got something to add? Join the discussion and comment below.

Rory Sutherland is vice-chairman of Ogilvy Group UK.

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Show comments
  • Darnell Jackson

    Same applies to grocery deliveries, much better a single annual payment than individual delivery costs

    I enjoy your writing by the way, best wishes for the New Year

  • Peter Watt

    Thank you for an interesting article. As it happens (and apologies for didacticism) you are independently re-discovering some of the ideas of price discrimination and non-linear pricing. An early discussion is in A.C. Pigou (1932) The Economics of Welfare, (4th Edn), Part II, Chapter XVII, Discriminating Monopoly, II, Chapter 17

    • rorysutherland

      Thank you for this. I mainly knew of Pigou through the adjective Pigovian – applied to taxes, I think.

      I have just been told that the German railways have a kind of equivalent of Amazon Prime, where you can buy an annual BahnCard50 or Bahncard25 for respectively 50% or 25% off your every journey – as well as a Bahncard100 (which functions as a season ticket, naturally).

      I am generally in favour of price discrimination, since it seems mostly to function as a redistribution of wealth through entirely voluntary means…….

      • Hamburger

        It is a lovely idea, unfortunately our railway is now trying to get rid of it. It is too successful.

  • post_x_it

    In Italy the trick is to drink your coffee standing up at the counter, in which case it is subject to a nationally regulated price (around €1 I think) which is the same at the Caffè Florian in Venice as in a neighbourhood dive in Mestre.
    As soon as you sit down, they can charge whatever they like, and I wouldn’t be surprised if some places applied a surcharge for hapless foreigners.

  • Malcolm Stevas

    Those 4€ coffees in Rome? Sound principle – my local pub has its own bitter, priced considerably lower for locals than for out of area visitors. And though multi-storey car-parks are mostly horrid, I like the photograph – or at least, that Ford Zephyr/Zodiac Mk2, first car (my father’s) I ever drove aged 16.
    As for parking in central London, hardly ever do it since I do my best to avoid driving there unless compelled to do so – last time I got nobbled by a zealous traffic warden for overstaying my meter by a few minutes, had to pay Westminster City Council £60, on top of the “Congestion Charge” ripoff…

    • rorysutherland

      One addition to my parking plan which I never mentioned owing to space: if I were to buy a £50 Sevenoaks Prime parking ticket, which would allow me to park in Sevenoaks for half price, I should also be given a little more leeway if I overstay my allotted time once in a while.

      If I have parked in a place fifty times without incurring a ticket and overstay on the 51st occasion, I am more deserving of the “benefit of the doubt” than someone who parks illegally on their first and only visit. I would have thought any human would instinctively understand this – just as I wouldn’t expect to pay for breaking a wine glass at a restaurant I had visited many times before.

      One of the reasons people hate parking fines and speed camera fines is that there is no sensible distinction between the punishment meted out for honest occasional mistakes and that for flagrant violation. This, I think, violates our instinctive sense of justice.

      I once got clamped at a station car park for parking in a space which wasn’t technically a space – though it inconvenienced noone. As I paid the clamper £100, I asked “just for interest, what would have happened if I had parked in a disabled space instead?” “Oh, that’s just a £30 fine.” Hmmmm.

      • Malcolm Stevas

        You put your finger on it: mechanistic punishment dished out by minor fonctionnaires lacking any
        capacity for individual judgement. Un-English.