Skip to content
August 25, 2014 / paulio10

Setting Any Price Partitions Humanity

When you set a price on a product or service, you are immediately partitioning your potential customers into two groups:

A. Those who can afford your product or service

B. Those who cannot afford it

Notice that these two groupings are completely separate from the two groups that are actually important to you:

1. Those who are interested in your product/service and want  it

2. Those who do not want it

You should be selling to those who want what you’re offering. And you shouldn’t waste your time trying to sell to those who do not want it. But the problem is, some of the people who want your service cannot afford it.  At any price.

How Companies Think Today

If you set a higher price, fewer people can afford it.  If you set a lower price, more people can afford it, but you get less money for each one you sell. You can make the most money by finding the “sweet spot” – setting the right price somewhere in the middle.  This divides those who can barely afford it, and those who can totally afford it.

For example, suppose you are manufacturing beautiful purses for women. Maybe it costs $250 to make one purse, and you want to sell the purses for about $500.  You run some statistics and the report comes back – if you sold them for $400, you’d get 1000 buyers. If you sold it for $500, you’d get 850 buyers; and if you sold it for $600 you’d get 300 buyers.  A good business will do the math —

$400 purse X 1000 buyers = $400,000, minus cost ($250 X 1000 = $250,000) or $150,000 profit.

$500 purse X 850 buyers = $425,000, minus cost ($250 X 850 = $212,500) or $212,500 profit     – better!

$600 purse X 300 buyers = $180,000, minus cost ($250 X 300 = $75,000) or $105,000 profit     – not as good.

So the business decision is made to sell them for $500 each – because that maximizes profit for the company.

The Problem This Causes

This doesn’t take into consideration the people who want the purses, but cannot afford them – they are left out now. That is just not acceptable. There are even people who might really need your item, more than other people – to look nice to get a good job, so they can feed their family, so they can take care of their elderly parents, their ailing grand parents; their special-needs child; their family pet that has come down with a serious illness.

Setting a price that maximizes profits has the bad side-effect of blocking many people from having the item, with total disregard to rightness in the world.

There is no right price that doesn’t exclude someone. You can calculate the number of people who would be customers, but cannot be, due to the price that is set. You can figure out the percentage of population you’ve failed to reach. Everybody in our world deserves to experience the product or service that you are producing, not just a few. Not just those that can afford it. Everyone.

How Companies Will Think In The Future

Businesses don’t know how to calculate factors like “individual need”, or “right distribution. So they don’t even bother trying. But these factors really exist, and they must not be ignored – the righteous thing, the compassionate thing, the human thing is to consider who you are leaving behind, and what the consequence of that is. I know that purses may not be vital. But food is vital. Housing is vital. Clothing is vital. Food has a price, and there are some people who cannot afford even enough basic foods to feed their families after paying outrageous medical bills. There are kludgy workarounds for the really poor like food stamps, but that kind of thing should never have to exist; it was not created soon enough when the need first arose; it doesn’t affect exactly the right people; it doesn’t help the slightly less-poor people that are still struggling; it encourages poor people to stay below a certain poverty level so they can keep getting their food stamps; there are many down-sides to a static one-tier solution like food stamps, when you have a rainbow array of people in society. It’s old fashioned and doesn’t solve the problem appropriately. It’s just wrong.

It could be that if you price your purses at $400 each, you’re leaving out 27% of the population from being able to afford one.  That’s a huge failed opportunity to help the under-privileged in our society.  At $500 each, maybe 35% cannot afford one; at $600 each, 55% of the population cannot afford one! All of these are a failure to meet the needs of Humanity, when you’re in the perfect position to do so.

You Are Missing Customers

Partitioning humanity by setting a price (any price at all) goes against nature. And Humanity is part of nature. You’re fighting a force far greater than yourself. My suggestion is, don’t do that.  Don’t fight nature. Cooperate with nature.  This whole system of finite-pricing has to go away some day, to be replaced by a system that more accurately reflects the need of the people whom the company calls customers.

Far more people may be able to use the products and services – and, the company may actually make far more money because of it.  The company won’t be accumulating such horrible karma for causing suffering by many human beings.  If you want something, you can have it.

By cooperating with how things work in nature, companies will be able to heal humanity of may mistaken illnesses we have emotionally and mentally. Feelings of inferiority, racism, separatism, us vs them, “haves” and “have-nots”. All this is ridiculous and needs to go away as soon as possible. But it can’t, it won’t, if companies don’t change how they interact with their customers – how they sell their wares – how they price their items.

There are higher forces in our world that affect all of us whether we believe in them or not. Like Karma. Making something more widely available to people increases your company’s good karma; making it available to fewer people (because you make more money that way) can actually cause bad karma. Because it’s not righteous to partition people into have’s and have-not’s.

People are highly creative. You don’t necessarily know what some inventive people are going to do with your product or service. Watch, and it will amaze you. In fact, some of the most creative people are those who HAVE TO BE, to survive: the poorest people in our society. What will the poorest, most inventive people do with your product? More than you could ever have imagined. Some of the greatest things have been invented and accomplished with creative re-use of things that aren’t normally used for a particular purpose.

Good Examples Today

There are some companies that are experimenting with variations in pricing that more accurately reflect the customer base, and they’re succeeding more than the founders ever expected they would.

1. Amazon.com e-books

2. independent game sites – via Steam, etc.

In the future, nobody will be left out of anything they want, anything they need. In any quantity. Think to yourself how that can come about. Because it can, and it will. You can figure it out now, and be on the cutting edge; or you can wait, and someone else will run with the ball and leave you behind. It’s your choice. The motto of the next generation of our society is: Everything To Everyone.

Stop setting finite prices. Stop partitioning humanity. I know that’s the current model that works today. Come up with a new model, like Amazon and other companies have. Don’t chop off your fingers because you’re keeping your arm.

Start making your products and services available to everyone who wants them, everyone who needs them. Find a way to price your product in a way that works for everyone.

It takes more work, more thought. I know you can do it.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: