High bid wins vs. stand in line

High bid wins, or stand in line. You can pay in money, or you can pay in time. The choice is yours …

Updated July 1, 2017.

One of the guys I read regularly, Gary North, uses this phrase occasionally in his free twice-weekly newsletter, Reality Check. The context is that you can either go for service or you can go for price, but not both. A doctor who doesn't take Medicare patients usually gets paid — a lot — up front, but can give you a lot of attention because high bid wins. A doctor who does take Medicare is cheaper for the patient (possibly you), but has to shuffle you through at the speed of light, and until you zip past her, you're standing in line.

That was his example, paraphrased. Mine deals with our heat pump.

Stand in line, out in the heat

Our outdoor unit died during the summer of 2005. We had a home buyer's warranty still in force for big repairs like this. The unit was getting old, and it was still insurable by the coverage, so the cost was justifiable at the time.

When we made the claim, we started waiting in line. They came out a few days later, recharged the refrigerant in the cooling line.

Two days later, the air conditioning stopped working again. We called the warranty company to state that the repair didn't work. They told us that they would need to verify with the repair contractor because they weren't going to pay twice for the same repair. Two more days of waiting.

I called back after the weekend. Well, actually, the other employee at the warranty company made a mistake; he could have submitted the work order after all. A few days more of waiting. The repair company comes out again, tightens something and recharges the refrigerant.

… and more standing in line

Two days later, again, the air conditioner stops working.

Finally, they replace the outdoor unit — a few days later. The EnergyStar rating is near the bottom; it's the cheapest unit they could get away with installing. The installer is none too pleased that I wouldn't pay $75 additional to have him dispose of my old unit. He's very short with me on the phone, and I have to dispose of the unit myself.

It only cost me the $50 deductible (and the home buyer's warranty premium for the year) to have the condenser unit replaced. But it took three weeks of the hottest part of the summer — the heat was so bad that I bought a window unit so that at least one room in our house would be cool! — and I had to dispose of my old unit myself.

It did cost me a fraction of the price of a new condenser unit. But the other two parties were trying to minimize their costs as much as they could (cheap unit, warranty company obviously paying the contractor very little, and extra charges for normal disposal services), and I “stood in line” a long time for it to be fixed.

High bid wins: No more standing in line

We let our home buyer's warranty coverage expire this fall. Now, we pay out of pocket in full for any repairs to the items that were once covered.

Which we ended up doing that December.

The emergency heat (filament heat in the heat pump) was not working, so the house was cold. Yesterday morning we called up a local heating/cooling service company that our neighbors recommended. He said, “Well, I can come out today, but I don't know when.” He showed up five hours later, worked for 20 minutes, and it was fixed! Better heat than we've ever had out of that unit.

He explained that he fixed some settings that were not reset during the installation of the other unit. In other words, the other unit wasn't configured correctly by the other contractor. Not only did they take a long time, they didn't even do it completely right!

He also noticed the outdoor unit was “contractor grade” and asked if this was a home buyer's warranty call. We said no, but that it was for the outdoor unit. He said, “Yeah, that's the stuff that the warranty company has installed.”

More examples of high bid wins

“High bid wins” governs auctions (obviously), commodities markets, housing markets (bidding war, anyone?), and more. Applied to business, more paying means more playing — playing while other people are standing in line. Consider these:

• Ground transportation. Consider the difference between going on a bus, a train, hailing a cab or Uber, or driving yourself. Riding the bus into town is cheaper but far less convenient than driving yourself.
• Airlines. Airlines have “high bid wins” down to a science. How many different membership levels are there just to get through the check-in and boarding process faster? (I've heard this described as “measured misery” and it's pretty accurate.) Also: first-class passengers get their drinks and other niceties even before everyone else boards.
• Medical and dental care. I mentioned this at the top of the post. Many, many people rely on insurance and government subsidies for medical and dental care. Because so many people cannot afford care without these programs, there's a lot of demand, which means a lot of waiting. For patients outside of these systems — the ones who can afford to pay cash up front — there's a lot less waiting.
• Theme park “fast passes.” Theme park lines can be notoriously long, especially for popular attractions. Normal admission gives you the right to wait in line for what you want, except if you pay extra for a fast-track pass that gives you some ability to skip to the head of the line. Whether this is a distasteful practice or not is up for question; I don't think it is, as it doesn't make sense to cheap out on a vacation.
• Free vs. paid apps. With some apps (applications) you can download and play for free, but you have to sit through ads (standing in line, basically). Pay for the app, and the ads go bye-bye.

The choice is yours

High bid wins. But if you want to save some money, the line starts way over there! Whether the wait is worth it or not is up to you!