Sunday, January 7, 2018

The Great HDMI Cable Conspiracy (or Why Stores Rip You Off on Expensive Cables)

The other day, I got a text from home.  A picture of something was sent to my phone.  It looked like a snake or a string.  Maybe it was a dog's tail wagging with a lot of motion blur in the photo.  I couldn't really tell what it was.

This blurry photo was followed up by an urgent text message:  "Dad, could you bring home one of these?"

After a few follow-up questions by text, I learned that the photo was of a damaged HDMI cable that connects a laptop to a TV that is used as a monitor.  The laptop's built-in screen has stopped working, so we plug the laptop into a TV to use as a monitor.  Apparently the cable broke while moving the equipment around.

Since I was at work near several stores, I agreed to bring home the specified cable.  I was curious about how much this cable would cost, so I checked some prices online.  I found HDMI cables from amazon, Target, and Best Buy for under $5.  That seemed reasonable.  But when I tried to select same-day in-store pickup, no $5 cables were available.  All that seemed to be in stock were the $20 cables.

I went to the store to investigate.  My first stop was Best Buy.  It was the case there there were no cheap HDMI cables in the store.  A store employee helpfully suggested that unless I had a 4K video set-up (I do not), I don't really need an expensive $24 HDMI cable.  I could use one of the cheaper cables down below.  The only problem was that these "cheap" cables were priced at $20!

HDMI Cable for $24!  Where are the cheap cables?
HDMI Cable for $24!  Where are the cheap cables?

The "cheap" HDMI cables are $20!  Where are the $5 ones?
The "cheap" HDMI cables are $20!  Where are the $5 ones?

Next, I made a trip to Target to look for a $5 HDMI cable.  To my surprise, they also had only expensive HDMI cables in stock, with the cheapest priced at $15.  I also checked Sears and found the same thing- only expensive HDMI cables for sale.

Why don't stores keep cheap HDMI cables in stock?  I think my next move answers this question.  I bought a $15 HDMI cable.  Sure, I could have ordered a cheaper cable to be delivered to my house with 2-day shipping, or maybe even found a store where I could get a $5 HDMI cable the next day for in-store pickup.  I could have continued to drive around and check other stores for cheap cables.  But I was there in the store and my son needed a cable in order to use the computer.  I decided I did not want to wait or mess around any more looking for a cable.

It makes economic sense for stores to only offer expensive HDMI cables.  They make more profit by selling expensive cables than cheap ones.  The profit margin is probably based on a percentage of the selling price, let's say there is a 25% mark-up over cost.  So selling a $5 cable would result in $1.25 of profit while selling a $20 cable would result in $5 of profit.  When you sell hundreds of thousands of cables, this adds up to a lot of extra profit for the store.

Selling people more expensive cables than they want or need is wasteful on several levels.  First, the more expensive cables really are better.  This means they consume more materials or higher grade materials to manufacture.  If you don't need an expensive cable, this is a waste of natural resources.  And of course it wastes money.  If all you need or want is a $5 cable and you end up spending $15, you just wasted $10 that you could have used for something else that you do need.

A lesson here is to know what kind of cables you need so you can avoid paying a lot extra for more expensive ones.  You might need to order cables online since stores tend to carry only the most expensive variety.

Another lesson is that a massive conspiracy among giant retailers to maximize profit can prevail over one man who desperately wants an HDMI cable...

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