Can a Service Be a Commodity
Well Enron dealt with this a little for instance an intangible such as the available bandwidth in fiber optic lines. So what is a commodity in a service business? Well, a commodity could be considered are capacity to wash cars for a mobile car wash business like the company I own, the additionally created capacity coming from increased efficiency in studying production rates. In a service business, increased efficiencies will allow more time to do more work and thus make more profits from additional work.
Our biggest customers sign contracts with us to clean cars, concrete, fleets, etc. by signing the contracts with us in advance, what they are able to do is the guarantee that we will do their job first, no matter how busy we get or no matter how much in demand we are to other potential clients. Service Contracts could in fact be commoditized too you see, just like Enron had decided it could do with excess bandwidth in fiber optic lines or timber futures for new home builders. The excess capacity for washing cars could be the capacity of our units to wash cars in advance directly to the general public after those important pre-scheduled and contracted fleets produce. By using prepaid carwash cards we can sell carwashes in advance to our customers at a predetermined price. We guarantee we will deliver those carwashes even enough the relative price of carwashes go up due to the demand that occurs both from seasonality, changing demographics and that change in more sunnier weather (which makes our phone ring off the hook).
Our customers are able to lock in the price of a carwash, or many carwashes, or a contract for our capacity to wash cars. Like Starbucks we are smart, we are constantly improving our capacity to wash more cars, while we eliminate other market players by bundling services, providing better services, afford better equipment, better marketing dollars or lower prices to the customer who signs up in advance. With these contracts in hand any company can use those against bank loans for influx of capital for expansion, those who sell their products and yes, services too will be able to better judge their future obligations and needs. Those who buy the contracts can also have their costs known and locked in. Those who trade on the float and provide a system for doing this also tend to assist the system by risking their monies on their perceived future possibilities of price fluctuations in that market.
So in fact a service, which becomes a commodity stabilizes prices, promotes efficiency and allows customers to lock in guaranteed deliver and price and that is a good thing, think about it Enron did.
"Lance Winslow" - If you have innovative thoughts and unique perspectives, come think with Lance; www.WorldThinkTank.net/wttbbs
Latest News
 BorderFire Report | Ready for the Great Negotiation? You better be BorderFire Report, TX - He has a great negotiation ahead of him to unite the country. As a negotiation coach working with hundreds of million of dollars in negotiations every day ... |
 Reuters | Boeing Averts Another Strike Aviation International News, NJ - “These were the toughest negotiations I’ve been involved with,” said professional negotiation team chair and three-time negotiator Dave Patzwald. ... SPEEA Engineers, Technical Workers Ratify Boeing Contracts |
Metalworks negotiation talks may resume Ludington Daily News, MI - ... Vice President of Operations Scott Lakari Monday and they agreed to set another meeting between the negotiation committees for the union and company. ... |
This Season, Some Tempers Simmer Wall Street Journal - For many, it means deep cuts into holiday budgets for things like gifts, travel and special meals out -- but also extra helpings of guilt, negotiation and ... |
 Seatradeasia-online | Steelmakers see gains from failed BHP bid China Daily, China - "The reason Rio Tinto demanded a price hike of 96.5 percent for iron ore supplies in 2008 negotiation was that it wanted to set hurdles for BHP's takeover ... BHP, Rio May Have to Cut Coking Coal Prices 33%, Analysts Say |
Negotiating skills for IT consultants TechRepublic, KY - Have you ever won over a potential client with a perfect presentation but lost them at the negotiation table? Rick Freedman describes what can go wrong and ... |
Assemblyman slams Yankee Stadium deal Lower Hudson Journal news, NY - "This negotiation was taking place at a time when the Yankees were dramatically raising ticket prices, while the state and the city were giving essentially ... |
Montealegre refutes political negotiation in Nicaragua Tico Times, Costa Rica - By Tim Rogers Managua mayoral hopeful Eduardo Montealegre stood his ground yesterday, saying his opposition contingent – Vamos Con Eduardo, the “We're Going ... |
Board, union agree on contract Monadnock Ledger Transcript, NH - By JOSH BOND PETERBOROUGH -- The ConVal Education Association has agreed to suspend its work to contract job action after a seven-hour negotiation meeting ... |
Training for Iraq, Virtually Media Newswire (press release), NY - new game-based training application recently was adopted by the US Army to enhance negotiation skills and cultural understanding of soldiers overseas with ... |