It’s happened to most of us at one time or another – a longtime friend or business associate slam dunks us on a deal and ends the conversation by saying, “It’s nothing personal, it’s just business” – which sort of means that you’ve just been bent over the nearest fence and abused. What is there about much of today’s business world that has become so disgusting, so aberrant, so obvious to most of us, but seemingly ignored with complacency? People with a yearn for bigger bank accounts put Ivy League graduates and MBAs somewhere on the same level with doctors and other high-dollar professionals, thinking that there’s a well-kept secret to be learned with higher education and fancy degrees. It appears that, for many businessmen, the only secret is developing a propensity to continually check the bottom line with a skilled right hand that can manipulate a calculator faster than any three office assistants put together, and make adjustments above it whenever and wherever necessary in the blink of an eye, based solely on that day’s profitability. If you live in the country, check your phone bill, and you will no doubt find a city tax on it. It’s only about 23 cents on mine, but just think: If the phone company erroneously charges one million rural customers $.23 per month, that comes out to about $230,000 each month. Do you really think it, or any other company, is going to voluntarily surrender that amount of money to the appropriate city when it’s not required to do so? And its reps will argue with you over the $.23, somehow thinking the company is deserving of its ill-gotten gains. Over the course of a year, that’s $2,760,000, not chump change. Phones aside, the Internet has created a wealth of bogus “tax” revenues for companies brazen enough to do the “collecting,” including a nationally well-known provider of business software. Oil companies have made higher profits the last two years than even when J.D. Rockefeller was at the helm of an almost monopoly. The word “gouge” is gaining traction, and we’ve all certainly felt its stab. European nations pay $5 or so for a gallon of premium gasoline, but they also get health care for almost nothing and their euro is kicking ass with our dollar. I learned a few things about pricing after I graduated from the University of Colorado business school and came home to Aspen. I learned that for some businesses, it is necessary to double the wholesale price to make a decent retail profit. If the wholesale price is $50, common sense would tell you that raising the price to $100 (fifty plus fifty) is doubling the price. Ah, but not so fast. It’s necessary to double it one more time ($100 to $200) to truly “double” the wholesale price. That way, you’ve doubled it twice, right? Which is double, actually. You see, it’s not really about math, after all. It’s more about greed. An associate of mine in the trash business, a terrible businessman, used to say that if you couldn’t post your prices on a roadside billboard and defend them, they were too high. Probably the only honest thing he ever said, but in his defense, he obviously hadn’t been to the 21st century school of commerce. We used to try to make an annual 35-percent return on investment for our stockholders, but found that many times we were making 60 to 70-percent profit every month, which translated in some cases to over 400-percent return on investment (sometimes much more). When I suggested we give some of that money back to the customers, I was suddenly made aware of how fragile my existence really was. So, as some of the highly skilled and educated businessmen hunker over their calculators, looking at you out of the corners of their eyes, remember that ethics and morals are not necessarily a part of the pricing structure. As my neighbor Hugh said one time, “It’s no fun getting screwed without sex.” Tony Vagneur doffs his hat to honest business people everywhere. Read him here on Saturdays and send comments to email@example.com
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