Wednesday, April 11, 2012

The Bird Lady

We went to Hawaii for Spring Break. Walking towards dinner we stop to watch a lady with three large birds. Before we knew what was happening she put the birds on top of Nico. At this point we took a picture. The lady took the birds back. I offered the lady 2 dollars but instead of taking them she said I owed her 5 dollars. This surprised me. She had no sign saying it cost $5 to hold the birds - nor had we asked to hold the birds. I told her she could take the $2 or leave them and she took them.

The incident led us to a discussion about pricing. It is usually a good idea for both sides of a transaction to understand the economics before the transaction takes place. If the bird lady wants $5 from each person who holds her birds she should let them know ahead of time. And I was also at fault: before letting the lady put the birds on Nico I should have asked her how much she would want (I incorrectly assumed that a "tip" at my discretion would do).

We wondered how the lady would make the most money. Maybe the reason she doesn't say upfront that she expects $5 is that if she did, many people would walk away. We wondered if more people would hold the birds if she lowered her price to $2 and advertised her low price. She could try different approaches on different days and settle on the approach that generates the most money. Maybe she already did that!

We also discussed that she could do a better job at branding herself. For example, a small sign about the protection of endangered species, and an affiliation with a non-profit, might help her.

Finally, when I offered the $2, she could have take them, then politely asked me to consider giving her additional money because the birds are really expensive to care for (or some other such reason). Instead of rudely telling me that I owed her $5.

Don't show this picture to Martin!

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