Why Kenyans Have Bad Pricing Methods

Take a walk downtown Nairobi to Nyamakima and its environs to search for car parts. There you find engine mountings that work well in both Toyotas and Range Rovers.

You show the parts shop the sample and immediately they ask: "what make is your car?". Should you say a Range Rover, the price given verbally becomes something around four thousand shillings.

But if you told them it was for an old Toyota engine now serving as a generator on the farm, the price will go as low as seven hundred shillings. It is not the value in the part that counts, it is the value in your car that counts in second-hand parts pricing.

Away from parts, even when the merchandise is something else, the logic is the same. Most things used in the country are imported. So the starting point nearly always is from a finished product perspective.

Were they manufactured locally, it would have been easy to cost every stage of product development to the finished offering.

And even when they are manufactured locally, bad pricing practice has taken root. Besides factoring in the invisible cost of corruption, most people want margins above 50%. The pricing strategy has shifted to punishing people for what they have and not the value in the products they seek.

Whereas pricing is a science, in Kenya, it is an art. Everyone is a valuer operating on self-benefiting street-acquired methods. But this state of affairs must concern us as it extends to professional services as well.

A functional country has mechanisms to arrest exorbitancy. Whereas nobody will fault you for charging as you wish, consumers must be protected from poor quality products and bad pricing. If the bodies concerned were functioning well, we'd have value-for-money propositions all over.

In many instances, goods and services are priced with kickbacks to such bodies factored in the math. We also have a consuming public that does not care to find out what they should pay for the value sought.

At the end of the day, everything rises and falls on leadership and for as long as the public is deprived of useful decision-making information, we will all grope in the dark. A caring leadership will ensure that citizens are empowered to arrive at critical financial decisions.

But cartels abound and we are already ambushed by the few offerings whose barriers to entry are so high that we have no choice but to partake in questionable product offerings. Most people find the cost of living already so high that when given a chance, they price their wares so highly to compensate for the cost of living. It now has become a merry-go-round where everyone in whatever financial state is in a spin.

As we get further integrated into the world economy, we must continuously find ways to remain relevant and competitive. Our local bad manners in punishing consumers simply because we want more from them will only serve to wipe us out of the global economy.

A free market economy still needs safeguards. That is where we have gone wrong.