Thursday, January 24, 2008

Mustache Rides: After 30 Years, Still 5 Cents

Everyone knows the economy has been getting a little rocky of late. There is one group that has definitely suffered. I'm talking about Mustache Ride Providers.

The fact is, as prices of fuel and other basic necessities have continued their relentless march upwards, the unsung mustache provider has had to make ends meet selling his service at a price of $0.05 - five cents. And that price hasn't really budged in 30 years. I ask: why?


Based on my research*, the prevailing cost of a mustache ride remains, after more than 30 years, mired at the level of $0.05. Five cents. That's not to say that there aren't some providers out there able to charge a quarter, 50 cents, even a dollar. But they are exceptions, probably because they bundle their rides with other services (car wash, income tax preparation, etc.), or because they have a local or regional monopoly.

The fact remains that in general, over the last thirty years, the price of a mustache ride has barely budged, while the costs for other indispensible consumer items have increased dramatically. Why?

Substitute goods/new technology. This is a possible culprit. After all, we live in an age of technological revolution. It's possible that, in the whirlwind of advancement in the area of personal electronics (and here I'm thinking of cell phones and ipods, and nothing other than those two things), the humble mustache ride has been bypassed.

Oversupply/New Competitors. I don't think this is the answer, since, according to my research* the number of mustache ride providers has ebbed and flowed over the years, reaching a high-water mark in the mid- to late seventies. And in the nineties, the number fell, and yet, prices remained the same: a nickel.

Intensity of Competition. Again, the number of competitors has ebbed and flowed, but prices have remained remarkably constant.

Decreased cost of production/new technology. Again, it's possible that over time, the costs of production have decreased, much like personal computers. However, the basic cost inputs to making a mustache ride are the same for all providers, and appear to have risen considerably over the last 30 years.

Buyer power. It's possible in theory for a buyer or buyers to concentrate sufficient might in the market so as to be able to name their price - not unlike a "company town" that has its pick of all the laborers in town. But in this case, the buyers are diffuse and unable to collude effectively, so I discount this as a cause.

So in the end, I don't know what is holding down the price of mustache rides. What I do know, is that it's hard out there for a mustache ride provider.

*I didn't do any research. I did loosely apply the "5 Forces" Analsyis, pioneered by Michael Porter of Harvard Business School. Thanks, Mike.


At 6:36 PM, Blogger Jamy said...

The footnote made it. Hilarious.

At 5:20 AM, Anonymous Anonymous said...

i so want to take this analysis to school.

-el snarkster


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