Balancing societal/personal best interests?

[ethereal]

I'm wondering how you guys feel about choosing between what's best for society and what's best for you when making business decisions, i.e. to profit maximize or to perhaps discount your products and allow society/consumers who previously couldn't afford to buy them to benefit.

I think I've gotten past the point of caring about how much money I personally want, but I still feel that I could make better decisions than other people on where to use this money to help the world and thus I'm entitled(?) to make as much as I can. Is this justified?

It's weird to see such a conflict and I'm hoping someone can help me resolve this. From my spirituality/consciousness studies, all contradictions are resolvable at a higher level, and Steve would probably agree that there ought to be no distinction between serving others and serving self. How does this translate into practical business advice?

[JiriNovotny]

Well, it's a tough one. This post is a bit inconsistent, these are just some of my thoughts.

- If you sell things for a lower price, more people will be able to afford them, but you will probably make less money.

If you make less money, you won't be able to
a) create better products
b) reach as many people as you could
c) donate as much money as you could to charity

Maybe your motivation will be lower too. There are many factors included.

- I think that business should be as profitable as possible, but you should provide as much value as possible as well. If the provided value and price doesn't match, you will ultimately harm yourself and your business won't work.

Therefore, when your business is the most profitable, it is probably at the best spot. Of course, you still have to have your business very ethic, but again, if it's not ethic, you will only harm yourself in the long run.

- If people love your products and business, and your business is profitable, you are on the right way. People loving your product is the ultimate indicator I suppose. So make sure people love your product.

- What about Bill Gates? Do you think it is better for him to help society with his huge philanthropic projects, or with cheaper software? (He does both btw, Microsoft software costs much less in developing countries)

There are really many ways to look at this. For instance, you could say that if you still can't geographically reach all people that need your service/product, it makes no sense to try to discount your products, because you will make less money and wouldn't be able to reach customers in other countries.

As I said, just some thoughts

[Jill]

I'm wondering how you guys feel about choosing between what's best for society and what's best for you when making business decisions, i.e. to profit maximize or to perhaps discount your products and allow society/consumers who previously couldn't afford to buy them to benefit.

One doesn't have anything to do with the other.

Charge as much as you can and still get business. That's capitalism and it works. There's nothing wrong, evil, bad for society about it.

You can still do plenty of free things for people as well. But your services are your services, and there's no reason to discount them if there are people willing to pay a premium for them.

Remember, what you do may seem easy and not all that valuable to you because of it, but it's the value that it provides other people that you have to always remember. And that value will often help those other people to make money with their own businesses (if you're doing B2B) stuff.

[Baltar]

Originally Posted by ethereal

I'm wondering how you guys feel about choosing between what's best for society and what's best for you when making business decisions, i.e. to profit maximize or to perhaps discount your products and allow society/consumers who previously couldn't afford to buy them to benefit.

I have to agree with the previous responses. You should charge as much money for your products and services as people are willing to pay for them. If someone can't afford to buy from you then that's a problem for them not you. Think about it this way -- the people who can afford expensive things have usually provided a great deal of value to society in order to create their wealth.

For instance if someone can afford a BMW then they deserve it, because they created equivalent value for someone else. Should BMW lower their prices so that more people can afford their cars? If they were to do that, they'd also have to lower their standards and quality. This would eventually make them spiral into making cheap but crappy cars. You can't make something be really cheap and at the same time really good.

Another good example is Apple. They make very expensive but also very high end computers. Their hardware is always top of the line and they also make their own operating system, which allows them to tune it to work perfectly with their hardware. Many people can't afford a Mac, but those who can are able to obtain something unique that's not available from any other company. And again, if Apple had to lower their prices they wouldn't be able to afford doing what they do now and would become just like every other computer manufacturer.

One last thing I wanted to mention is that maximizing profits typically doesn't mean charging more money, but rather spending more time on sales and marketing. These two things will typically play a much greater role in how much money your business brings in, unless you're charging a lot less than you should be for what you're selling.

[da1prophet]

I've never had any problem at all balancing what is best for me personally and financially in terms of my business and what is best for society. As one of the other posters noted, free markets work and I'm a big believer in them. If you look at successful American businesses there are companies that target all sorts of income levels and do very well at it.

Besides, there's a lot more to doing good for society than just making things affordable for lower income people. As I've mentioned elsewhere, I'm a big dog lover and I'm fortunate that I've made enough money to give generously to charities that help find homes for abandoned, neglected and abused dogs. If I were to charge less for my services, I'd make less money. If I had less money, I'd have less ability to do good with that money. To the contrary, one of my primary reasons for wanting to make *more* money is that I'll be able to do more good things with it.

There's unfortunately a lot of people who have a mistaken notion that anyone who is successful in business and makes a lot of money is inherently "evil" and that someone who just scrapes by in life is inherently "good" and deserving of our pity. Not saying you're one of them, but I've met plenty of people who have this belief. Money may not be able to buy happiness, but it does provide freedom, a certain degree of influence, and is in itself a resource that you can use to do good things for others.

[da1prophet]

Business success, and the money that comes from it, also allows you to do good on a more "micro" level as well. For example, I've got a friend of mine who is a very talented graphic artist. Unfortunately, she had a very outdated computer and couldn't afford to get a new one. As you're probably aware, computer graphics requires a lot of computing power and this was a major source of frustration for her. So I bought her a new computer. It made me feel good that I was helping someone, and its given her the ability to develop her skills and start to do free lance graphic work. I, quite frankly, haven't even missed the money I spent to do this but it very literally could end up changing her life for the better in a very substantial way. Without the financial success that I've achieved, I wouldn't be in a position to do anything to help her. And I'm fairly certain that once she achieves a measure of financial success she'll be more than willing to do something similar for someone else in need.

Someone in another thread was talking about the difficulty of selling products you don't believe in, and I couldn't do that either. On the other hand, if I provide a good service that I'm proud of, charge what I feel is a fair price for it and make a good living at it I definitely don't have any moral or philosophical issues with my business. And if I'm generous in helping others in need--either via the animal welfare charities I donate money too or, on a more personal level, helping people when I can like my graphic artist friend it keeps my best interests perfectly attuned to the best interests of our society as a whole.

[Dani]

All of the above are correct.

You should charge that correct market value of your products. If you undervalue your products you are showing a lack of respect to yourself and your products.

More people might be able to buy them, but those people will probably receive less benefit from it beause they themselves value it less.

You would take a lot more care of a car that costs $50,000 than you would of one thats costs $500.

So by reducing your costs you aren't actually doing anyone any favours. The best thing a person can do for society is to become the best they can be, and fulfill as much of their potential as they can.

If you undervalue yourself and your products, you are reducing your own potential.

Plus you are reducing the potential of others by making it easier for them to aquire.

[da1prophet]

Originally Posted by Dani

All of the above are correct.

You should charge that correct market value of your products. If you undervalue your products you are showing a lack of respect to yourself and your products.

More people might be able to buy them, but those people will probably receive less benefit from it beause they themselves value it less.

You would take a lot more care of a car that costs $50,000 than you would of one thats costs $500.

So by reducing your costs you aren't actually doing anyone any favours. The best thing a person can do for society is to become the best they can be, and fulfill as much of their potential as they can.

If you undervalue yourself and your products, you are reducing your own potential.

Plus you are reducing the potential of others by making it easier for them to aquire.

Exactly. My ex-wife is a dog trainer and she quickly found that she was charging too little and raised her prices for personal lessons. Not only does it make her more money, but clients take their lessons much more seriously when they're paying a premium for them. I've talked to others in similar service businesses that suggest her experience isn't unique.

The technical term for this is "perceived value". There's a lot that goes into pricing a product or service. It may seem strange, but with many products charging a higher price can be a very good strategy: for example, if I go to the liquor store to buy a bottle of wine I'd be very unlikely to buy one that cost less than $10. I know that there's a number of good wines that cost less than $10, but there's also this subconscious perception that a lower priced wine is for drinking while you sleep on a sidewalk heating grate. I'm also a cigar enthusiast and there's been several quality cigar brands that launched with lower than market average prices and they couldn't give them away even though they were very good. When they raised the prices a couple of dollars they started to fly off the shelves. IMO, it was a case where the market they were seeking had a predisposed opinion that a cigar costing under $3.00 a stick just couldn't be any good and they wouldn't even try it. Logic would suggest that if you sell a product of comparable quality at a lower price point to others in the market that the world will beat a path to your door but it just isn't always the case.

[Hugh Hollowell]

I know this sounds flippant, but it is not meant that way, I am very serious.

I have always found the best thing I can do for poor people is not be one of them.

[ethereal]

Wow, thanks for the responses! I don't typically check the business forum so I didn't notice until now.

I think you guys are right, I had the unconscious notion that making products cheaper = providing more value, but this actually takes away perceived value in the consumer's eyes. And the extra money that can be earned can be recycled back into the economy, being able to help more people where it matters.

Our business recently had the possibility of giving our software products away for free to universities (since they couldn't afford otherwise), and I wasn't sure what to do, hence the post. There are pros and cons to it both ways, but now I realize that the ethics of the issue shouldn't come into play

[Dani]

Giving away for free is a different issue though.

I am all for volunteering for two reasons.

1. It increases your own value more than by selling cheaply. You will find that doing things for free gives you kickbacks often far in excess of what you would have recieved if you had asked for a small payment initially.

2. It is great advertising if it is for an education or non profit organisation.

Giving your software to a university means that the next generation already has had a sample, and if it is a quality piece of work they will want to keep using it when they leave and then they will pay for it. (or get their boss too).

Selling cheap = bad
Giving the the right places free = good

Confusing I know