Most Indians, me including and people I know of, do not understand the concepts of pricing that Western countries talk about.
Even now, in 2020, this comes up frequently in product pricing when I talk to founders in India who haven't seen the Western notion of pricing first hand.
Describing pricing according to demand as being the “Western notion of pricing” is one of the most bizarre things I’ve read on the internet recently. I say this as a resident of a South East Asian country where Chinese and Indian immigrant merchants have prospered plenty due to a keen sense of price and value.
Agriculture in Europe runs on underpaid, often illegal, immigration.
There's pressure on the consumer side not to pay, say, a tomato more than a few cents, which means you either pay workers peanuts or you just don't harvest them.
There are a lot of people that don't understand it in the west as well. It's also not as easy as some people make it sound. After all, it's the perceived value of both parties making the trade and not the actual value that's important.
Yes, take the original situation for example. The coconut harvester and the person employing him perceive the work to be of very low value.
As such, the actually valuable work with high danger, which should've been paid appropriately is significantly underpaid.
/edit: maybe its easier to relate in the context of the tech industry... while it has significantly less impact on the employees live its prevalent there as well, and in both directions.
fresh graduates which get less then a third of a full employee while still producing basically the same value to the employer. (this obviously depends on the graduate, but surely everyone knows that people at the start of their career tend to be significantly underpaid). both the graduate and the employer just don't perceive their work to be as valuable.
its just as easy to find the pendulum swinging in the other direction as well... people which might even effectively sabotage the work of others while still looking perfect to the person paying the bill, essentially increasing their perceived value to the person paying the bill while effectively reducing the actual throughput/quality.
> but surely everyone knows that people at the start of their career tend to be significantly underpaid). both the graduate and the employer just don't perceive their work to be as valuable.
If everyone knows this, then why isn’t there an employer taking advantage of this arbitrage opportunity to pay the new graduates more and use their “valuable” labor to generate valuable products for sale?
The answer is that no one knows the exact numerical value of the “value” of someone’s labor. Hence we rely on the buyers and sellers’ making offers to each other and coming to an agreement. As long as there are many buyers and many sellers, working independently, the market value should become evident.
Sometimes the buyer pays a little extra, sometimes the seller pays a little extra. It’s when there is no price transparency and insufficient number of buyers and sellers that the signal gets noisy.
Pricing in the Western systems is all about finding out how high you can price so fewer people pay a lot more which offsets running a larger scale business to serve more customers at lower price points. So these systems have accepted that not everything is for everybody, and do not even make an effort to get things to people. US healthcare is a good example here.
Countries with much large populations can not run that way, not everything at least. We are still learning to balance, which is why I want to adopt a region-based pricing for anything I build. Since customers from Western nations get a kick by paying more, I say, let them. Get and money and subsidize for the rest.
The US is not "The West". Price/market segmentation, which is what you're describing (by region) is not exclusive to India or "The East".
"Finding out how high you can price" things is more of a strategy for veblen goods, it is certainly not how everything is priced nor exclusive to any geographic region... I don't think I'm following this at all. :)
The west has prices for lower income groups as well via coupons and other distribution channels hidden away or made inconvenient for higher paying customers. Part of pricing is capturing as much of the demand curve as you reasonably can.
Even now, in 2020, this comes up frequently in product pricing when I talk to founders in India who haven't seen the Western notion of pricing first hand.