Thursday, April 26, 2012

Is it all about money, honey?

A business that makes nothing but money is a poor business” – Henry Ford

He was right when Henry Ford said that. The modern day businesses seem to have forgotten that. Everywhere you go, whatever service or product that you want to buy, businesses demand money. There are freebies available too, but everything else is charged for.

Apart from the comfort of doing things online, today, guys from the bank would come at your doorstep to pay you cash or collect cheques, guys from telecom companies would ensure that you are connected; pizza guys would make sure you are not hungry or thirsty. Is it all for the customers’ comfort or for the money which the customer has?

Now an average individual has more money to spend and even more options to spend on. Consumer electronics, two-wheelers, cars, smartphones, tablets, laptops, fast food, travel and accommodation – there are so many options. Other than the basic necessities many people spend a lot on their hobbies – buy something associated with it or join some classes for that.

Last week, I also jumped on the bandwagon and joined, not one, but two hobby classes – swimming (as I wanted to learn how to swim) and guitar (as I wanted to improve my guitar playing skills). I am really impressed with the way both the instructors guide me to get the respective skills.

There I observed that not only they coach well, they also offer some ancillary services – something which they are not expected to offer (It is still common for the music class but not for the swimming class). At the swimming class they also sell some swimming gear – swimming caps, swimming glasses, etc., while at the music class they can arrange for musical instruments and related accessories – they buy from a supplier and sell to the buyer who has ordered for it. Everything is on demand.

One could argue that they charge more for their offerings. Some do others don’t. Those who charge take their margin in the trade. It could be nominal or substantial depends on the service provider and the product or service. The advantage which the customer has is that they have a relatively higher chance to get better quality without leaving their comfort zone. This is the case most of the time when there is someone who is more experienced to help you out select the best of the available options. But this experience at times comes with a premium – the service provider charges extra for it. This generally has a markup of 10% to 50% on the market price of the item.

It is not just the market that one has to pay extra. This one is in a different context but is the best one. Once I required a change of Rs. 100 (to pay Rs. 50). I asked my wife if she has a change of Rs. 100. She nodded in agreement. My mistake, I told her that I have to pay Rs. 50. She handed over her piggy bank to me and asked me to take Rs. 50. I tried to act smarter; I put in Rs. 100 into it and took out two Rs. 50 notes from it. She insisted and then I had to put back one Rs. 50 note back into her piggy bank. “This is a charge for the exchange services”, she told me. Oh God! Charging 50% for this service is too much. But I had no choice, the damage had been done!

Whatever the case, some people prefer to consult the service provider for the price and then buy it from the market. If they don’t have enough knowledge then they end up paying more or get a sub-standard item. The best option in my opinion could be to do a due diligence and then consult the service provider. If you like their offering then go for it else buy what is available in the market!

Jaago grahak jaago!


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