“If it didn’t make them money, they wouldn’t do it.” That healthy dose of skepticism was the mantra of the first entrepreneur I knew: my dad. To this day, whenever my mom mentions loss leaders, BOGO deals, and doorbusters, my dad smiles, shakes his head, and repeats his favorite pearl of financial wisdom. This notion has always been accepted as truth in our family, and I am continually amazed at how so many people disregard the fact that a business’s number one job is to stay in business. The waters get murkier when it comes to more innocuous organizations, but the truth remains. Case in point: the shopping catalog I received from our teacher’s union.
Last month, the National Education Association filled our teacher mailboxes with catalogues for something called NEA Easy Pay. The cover declared ‘Tis The Season to be Gifiting above a pile of stuff — Tickle Me Elmo, Ninja Turtles, a Samsung TV, an iPhone, a Nutribullet, a Keurig, and a few other things that I didn’t immediately recognize. The subtitles guaranteed no interest, low convenient payments, no fees*, and no credit checks. An even more frightening subtitle had my first and last name printed on it with the promise that I had up to $2,000 for gifts this year. A quick flip through the pages informed me that I could purchase everything from toys and living room furniture to home security systems and down jackets. I was horrified. My colleagues, however, gobbled it up.
For days, I watched as pages were dog eared, catalogues were passed around, and lists were made. At first, I stayed silent. I figured if people wants to squander their paychecks, they probably didn’t want me to point it out to them and would find other ways to do so, even if this catalogue weren’t an option. One by one, people signed up for these purchases. $12.50 from every paycheck for the next year. $13.46 from his. Soon, people were paying more from NEA Easy Pay than they were for their insurance and union dues combined. I am certain that one coworker actually now pays more into NEA Easy Pay than the required 10% that gets funneled into her pension.
After that, I couldn’t stay quiet. When someone would point out a Fitbit Flex or another entirely unnecessary purchase, I would quickly do the math for them. The $4.62 per payment sounds like a bargain until I pointed out that it would come to over $120 for the year. A quick Google search yielded dozens of retailers selling the same item for $20-$40 less. Some of my coworkers were shocked. “But they said no fees!” “They’re the NEA. They’re supposed to be on our side!”
But a few of my other coworkers looked at me sadly as if I were somehow missing the point. “It’s only $5 a paycheck. I couldn’t afford it otherwise.” “The union wouldn’t take advantage of us.”
To which, I could only reply, “If it didn’t make them money, they wouldn’t do it.” Just like the slew of retailers who so nobly broadcast the fact that they would stay closed on Thanksgiving, would shutter their doors on Black Friday, or eschewed sales entirely due to their already low prices, the union was preying upon a weakness in our logic. Just because something sounds noble or some company normally acts in a way that benefits us does not change the fact that every business needs to make money to stay in business. It’s one of the first truths that business owners learn. It’s time for customers to learn the same.
*With an asterisk. There’s always an asterisk. That’s the only real guarantee in life.
So Tell Me…How have you seen this logic play out this holiday season? What other truths do you know that make you a smarter consumer?