Say you make toothpaste, and you can sell 1 tube for $5 at $1 profit, or sell 2 tubes together for $8 at $1.50 profit. Which would you rather do? Get $2 profit for 2 tubes sold separately, or $1.50 for 2 sold together?
Assuming you are rational and know how to use your phone as a calculator, not just play Candy Crush, you are likely to have chosen to sell 1 tube, twice. That’s certainly what I chose. However, this was not a question asked in a finance class, but in a psychology class, and so the answer was not what you’d expect.
It turns out that when people buy toothpaste, they use the tube in a very non-linear way – ie, they don’t use the same ‘pea sized’ portion every time. At the beginning, when the tube is full, they are wanton and haphazard, squeezing from the middle, ejecting giant worm sized portions onto the brush (as the ad suggests, to be fair). With reckless abandon, we laugh manically as we squander large portions of minty flavored mouth gel. With scant regard for our dental future, we consume recklessly. We are periodontal locusts.
Then as the tube starts to run out, and we see scarcity coming, we use progressively less and less – often unconsciously – until by the end of the tube we are conserving carefully, using rolling contraptions, vices and steam-rollers to eek the last dregs out of the flaccid spent tube (don’t Google that). Too late we realise the folly of our excessively-consumptive ways.
However, if I have another tube on standby – particularly if that tube came in the same box as the other one – my reckless toothpaste usage will continue until the end of the first tube and well into the next one – so overall, I use 2 tubes quicker than I would have used 1, twice.
Now toothpaste makers know this full well, and so often entice us with ‘special’ deals, and even though they make less on the double pack than they would had we bought two separate ones, the change in our usage pattern makes it overall better for them. The same goes for manufacturers of razor blades and other items that become scarcer over time.
The most interesting thing about this fact, is that now that you know it, like me, you will try work out how to use it to make a billion dollar company. So far my best plan is to sell multiple jars of Vegemite taped together, but I’m not sure the phenomenon will reoccur….I will report back if I come up with something better.
In other news, I got to ring the bell today for the beginning of class, so far the only real perk of being class president. The Russian did look like he was going to salute me once, but I think he changed his mind when he realised that action would be reported in the blog, so he settled for a friendly ‘peace’ sign. Not sure when the benefits of the presidency will accrue to me; I suspect I will pull an Obama-like glory run in the final week and solve the Iranian situation, world hunger and the vexed problem of the strangely-flavoured lunchtime humus in one fell swoop.
Total exercise in last week: 8 hours. To be honest though, I have included the times I sat up in that number as apparently sitting up is exercise.
Total weight gain since arriving = +1.1 (but my wife reliably tells me that muscle weighs more than fat, so I assume it’s basically all these new abs I am developing which accounts for the increase).
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