Tuesday, October 9, 2007

How free haircuts could revolutionise the economy...

No, I haven't lost it [just yet]. Just following a train of thought that has challenged me every time I've had a haircut over the last three or four months -

What do you pay for a haircut? R20? R50? R100. Whatever you pay, the price they charge must be worth it to you.

I challenged my barber to really test the value of the service he delivers - what if, for just a month, they stopped charging a fixed price for haircuts, and instead asked customers to pay them what the customer believes the service is worth?

Needless to say, he hasn't yet taken me up on it. I can't really blame him either, because the results would reflect the purest form of honesty regarding the value of his service... and good or bad, this would be quite a pill to swallow. Some customers might not pay a cent and get a free haircut... good for them. Some might pay more than you charge... HEY!

Think about the benefits for a second:

  • you know exactly where you stand with all your customers
  • customers can never complain about prices or inflation ever again
  • the potential for free marketing [word-of-mouth or other media exposure for having the guts to do this] - HUGE
  • how can your "competitors" compete with this?

The million dollar question: What if all other businesses ran this way too? Okay so this is just a haircut. How about cellphone service providers. Garden services. Security companies.

The billion dollar question: How could this revolutionise the economy, taking away "pricing-parity" excuses and really delivering value to all people in the country at a relatively affordable price?

And the trillion dollar question: What happens when your competitor starts doing this? How will that change your business? Are you in any way prepared for it?

We can laugh at this now. I can too. But who'll be laughing in 20 [or 10, or maybe even 5] years time when "Freevest" is the JSE's largest company?


phillygirl said...

I can't find too much online about it (mebbe I'm just using the wrong search words) but, I know some restaurants in Cape Town tried something along the "pay what you think it's worth" lines. Not sure how well it worked (they don't seem to be doing it anymore, or maybe it was only a promotional thing) but I did find this:
Relish Restaurant

Darren said...

Thanks for the link - I guess it will always be difficult with food, where people can really go overboard but seems to have worked nicely for Relish. I wuold hazard to guess that if they [in the food industry] can do it, pretty much anyone can!