Why Everything is Cheaper in Karachi Than Lahore or Islamabad

Recently a friend of mine asked on Facebook, why cars are cheaper in Karachi than in Lahore or other cities? This is a great question because answering it actually explains a lot about the socio-economic environment of the city.

The mentality in the Karachi’s business community is to sell quickly. They do not want to hold on to something for a longer period of time just to get a better price. They would rather sell it at low profit or even at loss than to wait for a better price.

When you hold on to something for better price your money is stuck. The business community of Karachi don’t like money just sitting waiting for higher returns. It is kind of risky, what if you never get a higher price on that thing and the first price you rejected was actually the best price that you missed.

This mentality helps the city’s business community to quickly buy new things as they arrive in the market. Lets take a look at the fruits market in the city.

Karachi is further away from the fruit farms of the country. Many other cities are surrounded by countless farms but you will find a greater variety and quality of fruits in Karachi. You will also find fruits in Karachi to be much cheaper than any other city in the country.

Traders in other cities will stop buying fruits from farms once their stocks are full. Fruits are arriving at much faster pace than they can sell. They don’t want to sell at loss or unbelievably low profits.

On the other hand, traders in Karachi will buy all fruits coming to the city. This only becomes possible because the traders in the city don’t want to stock, they want to sell quickly for lower profit margins and sometimes even at loss. This is why their stocks are never full and they can always buy more fruit from farms all over the country and even from other countries.

This mentality is not just limited to trade. You can see it in action in every aspect of the city life. For example, housing sector. Karachiites would rather invest their money in business than buying a house on their own land. This is why more Karachiites live in apartment buildings and on rent.

You can see this in action in the services sector as well. Qualified and skilled professionals would grab a low paying job rather than waiting for a higher salary.

This particular behavioral trait of Karachiites is the real force behind the city’s economic growth. Despite the fact that Karachi is the most dangerous city in the world to live and do business, the economic growth is able to maintain a steady pace. However, crime in the city is a major threat and there are signs that it has already started affecting this growth.

Slow economic growth in Karachi has extremely dire implications for the economic stability of Pakistan. Because if the money stops moving hands in Karachi, then it will affect every single person in Pakistan.

4 Comments

  1. Great Writeup with examples (Y)

    I had same question in mind when i was working in a Media house… “Why salaries are lower in Karachi Than Lahore?”

    You can compare TV Channels’ Admin, HR, Technical or News Departments salaries in Channels which have headquarters in Karachi or Lahore… A Immense Difference i noted

    Reply

    1. Yep. Karachi has cheaper workforce and the competition is immense. Because a typical karachiite would take low paying job rather than sitting at home.

      Reply

  2. is this the only reason for cheaper prices in karachi.. I think there could be more good reasons which should be cover up

    Reply

    1. Yes of course there are other factors which have helped develop this behavioral trait in the city. But I feel this is the most significant one.

      Reply

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