Fortune at the top of the Pyramid…

A few months back I had a chance to meet up with a friend after a long long time.We decided to catch up somewhere convenient and since New Delhi can be a nightmare during peak hours I checked if my friend could make it to my hotel.”  I was parked at a 5 star courtesy my company but was it a good idea to pay through the neck for the drinks which would probably cost 5 times less at home.After all we just have to get sloshed.

My mind started racing at the options – ask my friend to buy a bottle on the way, go and fetch a bottle myself and ask for room service for the glasses and ice.I could probably afford soda from the mini bar.

As I checked the guest services folio I found something-  a gift coupon which announced that the hotel had a buy one get one policy for house guests during happy hours from 6-8 PM. So that’s half the price already and I get to show ff the  free thing as a smart move from a regular.Both of us drank like fish did not occur to me and the ‘free’ part will probably bring out the animal in us even more.Anyways there was hardly any time..

My phone rang.It was Ashwin my friend – the NRI venture capitalist.I directed  him to the hotel’s pub ” wellington”.

As soon as we were seated Ashwin waved to the steward and before the poor guy could offer any greetings he ordered – two Glenfiddich large please.we resumed our conversation thereafter which basically went around good old days…

The steward returned and I was surprised to see that he had just got two drinks.

” where are the free ones??” I asked.

” of I am so sorry sir.That offer is only for the weekdays and today it’s a saturday” He answered.

I picked up my drink  and put in a bunch of ice cubes eager to taste my favorite drink just the way I liked it.Ashwin did the same. We were bottle buddies.

We had a good time and after 4 – 5 large Glenfiddich’s when we could barely stand up we asked for the check.It was some 8 thousand rupees including the snacks.Both of us offered to pay and finally after a lot of argument I managed to snatch the folio from Ashwin and shoved my credit card in.At that point I did not even register what the bill amount was.I did not even want to show off or proove anything to my partner.We had grown up together and wouldn’t have cared if either one of us had bought over the hotel at that point in time.We went to the parking singing a Jagjit Singh loudly and promised to meet again soon.We knew “soon’ would be a couple of years.

Next morning when I woke up there was a nagging feeling apart from the hangover.I could nail it down to ‘why the hell did I spend so much money?When I could not get it off my mind I decided to analyse my behavior :

1.I had decided to host Ashwin at the hotel bar because I wanted to do it or because of the free drink offer ?

2.If I was sure so sure I could not afford 8000 bucks I should have let Ashwin pay. It was just a couple of hundred dollars for him after all.

3. Did I really bother that I had spend all that money.The fact was that even I was making enough to do this once in a while if not everyday.

4.Did I have a good time and was it worth ?

So what was it that was bothering me ?

As I recalled the events of last evening I got stuck with a line from the Ghazal we were singing last night :

हमने माना कि कुछ नहीं गालिब ,मुफ्त  हाथ आए  तो बुरा क्या है …

I know for sure that Ghalib is worthless, but what’s the harm if I can have him for free.

That was where my answer lay.I was feeling cheated !! No it was not the hotel but I was feeling cheated that something that was rightfully mine for free had been taken away by putting up technical barriers.How the hell it mattered if it was a Friday or a Saturday – I was entitled for a FREE drink which I did not get.I was lured into the trap by careful fine print.It was a privilege that was taken away unjustifiably.You don’t get to drink single malt at a five star for free all the time.It was foul play and nothing else.

Should I stay back till Monday and take revenge ?? I laughed at myself but a big lesson in pricing had been learnt :

1. Not having to pay up for a product or service is something etched deep inside our psyche.It is a measure of our “privilege Quotient” and our smartness.

2.While the service provider wants to get paid X , the customer wants to pay nothing for it.

3.Nothing is worthless as long as it is free.

4.We are as much gullible as our greed and we will see what we want to see not what we should see.

5.The “want” for freebies has nothing to do with our economic or social status.When it comes to paying as close to nothing as possible we are all the same.

6.There is no price for anything , only cost. You can sell anything for any price staring from zilch and taking it upwards with the customer’s aspiration or need.

These tenets do not simply follow the laws of supply and demand as has been proved by the sultan of Retail Sam Walton.He had mastered the art of creating exponential demand with the least drop in prices, keeping the supply angle out of picture for his customers.More than keeping the products at Wal Mart cheap, it is their ability to keep their customers feeling that they are cheaper everyday as compared to their competition that makes them the world’s largest and most successful retailer.

CK Prahlad proposed that there is a fortune at the bottom of the pyramid.In terms of increased accessibility due to a low cost of acquisition it might be true.A company can therefore make money by profiting not so much on per transaction basis but on a bulk of transactions which are undifferentiated , with the low cost of delivery and last mile.

I have been thinking – Is there a fortune at the top of the pyramid too ???

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2 comments on “Fortune at the top of the Pyramid…

  1. Great post. It is amazing the insights you can gain from a normal interaction with a friend. I would not have thought of how this all relates to pricing.

    Thank you for sharing.

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