Sunday, May 15, 2005

Price Benchmarking

Every now and then, one reads about price benchmarking. Not necessarily of apples and apple products, but rather obscure and irrelevant apple and oranges pricing.

Perhaps the most commonly cited example is the price of a litre of milk, compared to say the price of a litre of bottled water. Or the price of a litre of milk or bottle water, versus the price of a litre of petrol.

Some of these comparisons are fairly simple calculations. It was quickly pointed out when it commenced operations, that the Heathrow Express train, that carried passengers from Paddington Station to London’s Heathrow Airport was, on a pence per kilometre basis, more expensive than a flight to New York on the Concorde on a pence per kilometre basis. A fairly simple calculation.

However, this one would not have been so simple: by volume, the ink for a HP colour printer is more expensive than Vintage 1985 Dom Perignon. A very intriguing calculation, even though the two are hardly substitutes for each other.

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