$82 Pizza

            Let’s make an analogy. I’ll use pizza. Everyone loves pizza, myself included, and it’s a business model I think we can all pretty easily wrap our minds around. So, let’s say you own a pizza business. You buy ingredients, you use those to cook pizzas, then you sell the pizzas to people for an amount greater than what you spent on the ingredients. People will pay the premium price, either because they cannot make a pizza as delicious as yours, or they simply don’t want to go through the time and effort to do so.

Now let’s say you typically sell your pizzas for fifteen dollars a pop… er, pizza. You can sell pop too if you want. But anyway, fifteen dollars will get you a large cheese pizza. Now, your pizza is pretty darn good. I mean, you even won a local contest last April for “Best Local Pizza.” I think we can all agree fifteen dollars is a steal for your pizza. Maybe it is about time you raise your prices a little.

So, the next day you open up shop. A regular customer rings you up and says, “I’ll have one large cheese pizza and a 2-liter of pop.” Incidentally, you decide to start selling 2-litters of pop for a $1.99.

“Sure thing Frank,” you say, “That’ll be $83.99 plus tax.”

“What!” exclaims Frank. “You’ve gotta be kidding me.”

“Look Frank,” you say frankly, “My pizza is the best in town, so I deserve to make a nice little profit off of it.”

Frank is outraged. He begins protesting outside of your store, he writes letters to the legislature demanding your restaurant be forced to lower its prices, he even takes to villainizing you the internet. All the while, you actually found a market for high end pizzas. Go figure. At the end of the month you posted record profits and even opened up a second store. As you hire new employees to staff your new store, you decide to bring Frank on. You know, to make amends.  Little do you know, Frank is still begrudged over the price hikes. He steals your secret pizza recipe and opens his own store, selling your pizzas for $50 each. He even sells pop too, just like you.

At this point, you take Frank to court and the judge sides in your favor. You run Frank out of business and ruin his life. The media runs a story on the “greedy pizza giant” destroying the local pizza market. People talk about the corrupt pizza business owner that takes advantage of their customers. You are probably the most hated person in the pizza business. But you know what? Profits have never been better.

-AMS