Tuesday, March 17, 2009

What profits are for

A coffee stall at one corner of The University of Melbourne claims to have a 'new concept of business'. They let the customers decide how the profits from their cup(s) of coffee would be distributed: to the owner, or to one of their causes (social, environment or cultural). Every time they buy coffee or snack, customers would be given a card, which they will put into one of four pigeon holes representing each purposes. At the end of every month, profits will be distributed based on the distribution of cards in each pigeon holes.

Yesterday, for the first time I bought their coffee (it tastes and smells good, and costs less than other coffees in the university and its surroundings, by the way). Then I put my card into the first pigeon hole: the owner. Yes, I want the profit from my cup to be enjoyed by the owner. My philosophy is simple. It is a small business, and if the owner can't enjoy a substantial profit, they might go out of business. Somehow, most of their customers also think so. The highest percentage of cards so far went into the 'owner' hole.

My preference may be different had it been, say, Starbucks or Dunkin Donuts. Not that I want to 'punish' them for making big profits. But those companies may have earned enough profits to keep them in business. Up to some point, a reallocation the profits may leave them as well-off as before, but it increase my utility if they sponsor an exhibition, a movie project or a concert. Off course, needless to say, that would also depend on to where or what kind of activities they will share their profits.


  1. ap,

    i would've thought that you - as an economist - would take the 'revealed preference' of those available options as indicating that the owner is already enjoying some profit. isn't it the case that the owner - of all people - is the one who knows best of his/her needs?

  2. Thinking like an economist now, eh Tirta?

    This seems to me like an effort to obtain information on social causes that customers care about, more than about redistributing the profits. (After all, isn't self-employment profit hard to define?).

  3. Hem.. im so surprise coz there is a new idea to alocate the profit depend on the customer request.
    Do u think other type of business can apply this concept?

  4. pe, when i bought latte at kere2 three days ago, the cards put onto the owners' profit were the smallest amount compared to cultural, environmental, and social cause. I dunno why. I read the notification then, last month, the profit went mostly to the owners' profit (more than 50% i think). Could this perhaps affect the buyers decision in allocating kere2 profit? (i.e: that last month profit already went to the owners and now its time for something else? :D )
    well, just a thought..

  5. Now that's a great concept. My guess is the small businessman is in fact a very clever businessman. It's unique ideas like this that attract customers. And by the sound of your blog, the profits to the owner are still reasonable