Can a Service Be a Commodity

Home
>
Negotiation
>
Can a Service Be a Commodity

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

In The News:

Yahoo! News: Top Stories

Rice arrives in India in wake of Mumbai attacks (AP)

AP - Secretary of State Condoleezza Rice arrived in New Delhi on Wednesday as part of a U.S. effort to ease tensions in the region after a three-day terrorist attack killed 171 people in India's financial capital.

Dems' hopes for Senate supermajority dashed in Ga. (AP)

AP - Relieved Republicans celebrated a resounding win in Georgia's hard-fought U.S. Senate runoff, a victory that denied Democrats a filibuster-proof majority and cemented the state's reputation as a GOP bastion.

Auditors fault Treasury oversight of bailout funds (AP)

AP - The government must toughen its monitoring of the $700 billion financial bailout to ensure that banking institutions limit their top executives' pay and comply with other restrictions, federal auditors said Tuesday in the first comprehensive review of the rescue package.

Obama to name Richardson for commerce secretary (AP)

AP - President-elect Barack Obama is ready to name Bill Richardson as his choice for commerce secretary after passing over his vanquished Democratic rival for secretary of state.

Gates: Military looks to accelerate Iraq pullout (AP)

AP - Defense Secretary Robert Gates signaled a willingness Tuesday to forge ahead with two key priorities for the incoming Obama administration: accelerating the U.S. withdrawal from Iraq and shutting down the Guantanamo Bay detention center.

2 arrested in alleged torture of teen, who escaped (AP)

AP - A Girl Scout leader and her husband were arrested after an emaciated, terrified and nearly naked 17-year-old showed up at a gym with a chain locked to his ankle, saying he had just fled his captors, authorities said Tuesday.

Study flunks 49 states in college affordability (AP)

AP - An independent report on American higher education flunks all but one state when it comes to affordability an embarrassing verdict that is unlikely to improve as the economy contracts.

American folk music legend Odetta dies at 77 (AP)

AP - Odetta, the folk singer with the powerful voice who moved audiences and influenced fellow musicians for a half-century, has died. She was 77.

Most Asian markets rise after Wall Street rebound (AP)

AP - Asian stock markets mostly rose Wednesday after a rebound on Wall Street, but pervasive concerns about the dismal outlook for the world economy limited gains.

Murphy's tip in lifts Pacers over Lakers, 118-117 (AP)

AP - Danny Granger scored 32 points and led Indiana back from a 15-point fourth-quarter deficit, and Troy Murphy tipped in a missed shot at the buzzer to complete an improbable 118-117 victory over the Los Angeles Lakers on Tuesday night.

Rice arrives in India to ease tension with Pakistan (Reuters)

Reuters - Secretary of State Condoleezza Rice arrived in New Delhi on Wednesday as part of urgent U.S. efforts to ease tension between India and Pakistan that has surged over the Mumbai attacks.

South Korea steps up crisis fight (Reuters)

Reuters - South Korea moved on Wednesday to help local banks through a cash crunch gripping the global financial system as central banks around the world were expected to cut interest rates again to support their fast flagging economies.

U.S. forces in Iraq detain, kill Iran-backed suspects (Reuters)

Reuters - U.S. forces in Iraq captured two suspected members of an Iranian-backed network and killed a third Wednesday, part of U.S. efforts to target a group it says has attacked Iraqi citizens and foreign troops.

Automakers' desperate bailout plea gaining support (Reuters)

Reuters - A top lawmaker predicted Washington would approve a bailout for U.S. automakers after they submitted survival plans, and General Motors Corp and Chrysler LLC said they needed an immediate infusion of cash to avoid failures.

Obama wrapping up cabinet picks with Richardson (Reuters)

Reuters - President-elect Barack Obama moved swiftly toward wrapping up his cabinet appointments on Wednesday with the selection of rival-turned-supporter Bill Richardson as secretary of commerce.

Republicans win crucial Georgia Senate seat (Reuters)

Reuters - Republican Sen. Saxby Chambliss easily won a run-off election in Georgia on Tuesday, denying Democrats the chance for a 60-seat "super majority" in the Senate that would have enabled them to pass legislation virtually at will.

Oil rises more than $1 (Reuters)

Reuters - Oil rose toward $48 a barrel on Wednesday, recovering from a tumble of more than $100 off July peaks, but the upside could be limited, with further signs of weakening oil demand expected in upcoming weekly U.S. oil data.

Clinton for a Clinton? Senate guessing game begins (Reuters)

Reuters - New York Gov. David Paterson has famous names to choose from in picking a replacement for Sen. Hillary Clinton, including a Kennedy, a Cuomo and even another Clinton, as in the former president of the United States.

Thai protesters abandon airports as flights due in (AFP)

AFP - Hundreds of anti-government protesters packed up and left Bangkok's airports on Wednesday after a crippling siege, as authorities assured angry tourists that flights would resume within 24 hours.

Rice arrives in India after Mumbai attacks (AFP)

AFP - US Secretary of State Condoleezza Rice arrived in New Delhi Wednesday to try and ease India-Pakistan tensions over the Mumbai attacks, as US intelligence blamed a Pakistan-based militant group.

Can a Service Be a Commodity

Negotiation Negotiation