Cheap profits
Saturday, September 29th, 2007Profits I can understand. Cheap profits I cannot. Profits are the normal mark-up on products or services that add value. For example, I recently rented a trailer to move stuff halfway across the country. I paid a fee (more than I would have liked) to use the trailer for a week or so, and it served its purpose in getting my stuff where I wanted it to go. It cost me less than buying a trailer myself, and I didn’t have to return it to the place I took it from, saving me a trip I would have had to make if I had borrowed it from a friend. In other words, this transaction added value because the company buys the fleet of trailers and assumes the risk and costs, but rents them out for a short time to people like me. Good capitalist transaction.
Cheap profits are money that a business takes in without adding any extra value. They leave a bad taste in everyone’s mouth except for the owner of the company who uses the money to buy mouthwash to wash away the aftertaste. For example, I went to buy a couch and loveseat to furnish my new place. They had a loveseat in stock, but no couch, so I paid for both and would pick up the couch when it came in. They called it a “price hold” because the set were on sale if bought together. Well we ended up changing our mind on the couch and decided to return it, or take it off price hold and get our money back. This of course required a fee of $5 that “they should have told [us] about when they put the price hold on.” Of course they didn’t tell us that detail originally. I consider this $5 fee a cheap profit because they, first of all, didn’t disclose it originally and let us opt in, and secondly because it doesn’t add any value. All of those services a store offers should be included in the price of the goods they sell. They didn’t do anything above-and-beyond for us, just took our money early for something we were going to have to pick up later.