Business vs Consumer
3.5.09 by Cypy + 77 comments!The way our economy works, consumers buy products from privately owned businesses, and these businesses try to make money. One way for a business to make as much money as possible, is to sell as much of their product as possible. To ensure that people buy their product, businesses tend to make what consumers want, and they also tend to compete with each other for the better product. Competition and quality products are both good effects of our economic model, but, unfortunately for consumers, there are other not-so-friendly ways for businesses to make money.
For a moment, think about large appliances: refrigerators, ovens, washing machines. All of these appliances have long lifespans, so people tend to buy them less often than more disposable products such as toothbrushes. Businesses make more money if they sell more products, so from an economic standpoint, it is good to make products that have short lifespans, and that people will buy more often. This seems to encourage disposable and short-lived products. At first thought, it would seem that a business that makes junky products that only last half as long as their competitor’s would not survive, but the methods businesses maximize the frequency that their products are bought are sometimes difficult to detect.
Take, for instance, the computer business. Computers are relatively short-lived.
Why?
Because older computers can’t run the latest software, and thus aren’t compatible with newer ones.
Why?
Because newer software runs slowly on old computers.
Why?
Because newer software has high resolution graphics that requires computers to be faster.
Why?
Because without fancy graphics, not as many people would buy the new software, and no one would buy new computers because the new software would run just dandily on their old ones. Computer companies need to sell software that takes up more space, and requires fast computers, or they won’t be able to make money off of computer hardware.
Another example of a frequent-purchase strategy is the printer business. Printers are very cheap. Printer companies actually sell them for LESS than they are worth, just to compete. A $100 printer, might cost Canon or HP $120 to manufacture. How do they make money this way? Simple: they sell ink. Printers cost a lot of money to make. People don’t buy printers very often. People usually only have one printer. Ink is very cheap to make. People buy ink all the time. People usually need to buy more than one ink cartridge. The printer companies capitalize on this by selling very small amounts of very cheap ink for very high prices. They can still compete with each other by lowering the cost of the initial investment: the printer itself. Buying a printer is like subscribing to a cellphone service. The company is willing to give a phone away for free, simply so they can have another customer paying monthly bills. The money isn’t in the long-term machinery of the printer, but printer companies have made a disposable-product business out of ink.