Zero cost
By Charles Bogue
Real Talk
November 21st, 2009
November 14th, 2009
November 7th, 2009
October 31st, 2009
October 24th, 2009
This past week, I was inspired to expand my ukulele knowledge beyond my limited repertoire of three basic cords. My first thought was to search contacts for a local teacher and sign up for some lessons and the second was to go to YouTube. To my pleasure, up came access to a number of audiovisual instructors.
This passive event gave thought to the fact that in the changing dynamic of our society we have come to expect our purchase to be not just inexpensive but free. There is evidence that this consumer paradigm has become a reality.
In my example, I used three providers at no cost. First, a free Google search to find YouTube, then a free search on YouTube to find the instructor providing a free set of ukulele lessons.
Similarly, with a few key strokes, click on Zillow to get a free value estimate on your home — though the accuracy of the estimate may be equal to the price you paid for it.
You can think of your own use of zero cost experiences on-and off line as having come to expect something for nothing. This does not suggest that the “zero cost” business model is flawed or without substance. So who is paying for that service you receive for free?
It is unlikely that hardware plays much of a role. History tells us that actual invention has not been where profits have been made. It is doubtful the creator of the first printing press made much money for the effort. It was those who sold the information and advertising that prospered.
The profit from the invented television did not go to the inventor but to the creators of the programming who sold the advertising. Similarly, we see mobile phones at zero cost in order for companies to sell lucrative service contracts with a menu of additionally costly services.
With the advent of the computer, information became readily available to the consuming public, forcing companies to redefine their business model around “access to markets.”
In the past, companies seeking profits focused on creating added value or decreasing production costs. In today’s environment, companies from Kmart to United Airlines have realized that they have an asset other than the products they sell.
That asset is access to and control of a dedicated group of customers. This access gives them leverage in control of provider costs and profit opportunities by selling this asset of committed consumers. In addition, this customer base allows the company to expand its profit potential to ancillary products and services.
I hope that as a member of one consumer base or another you too will benefit personally. In order to gain access to your disposable income, companies are competing by providing you with reduced prices and sometimes no cost at all. My ukulele lessons are free. Maybe if you shop carefully you too can get something for nothing.
Charles Bogue is a real estate broker in Napa. He can be reached at 486-5511 or e-mail: cbnapa@napanet.net.
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