Business 101: Non Revenue-Generating Products

Published on Mar 17, 2009   //  Business Topics

Most businesses have some products in their lineup that do not directly generate any revenue. When you go to a coffee shop, for example, you are given “free” napkins, sugar, cream, stir sticks, disposable paper cups, and so on. When you go to a clothing store, you are offered a “free” shopping bag to tote your purchase back home. These are all valid expenses for their respective businesses, but they do not generate any revenue on their own.

This does not mean, necessarily, that you should try your best to abandon these products altogether. They add to the customer experience and most customers come to expect these so-called “extras” when they visit the related establishments. However, some companies are really starting to cut back on these kinds of items, because they hurt the bottom line without directly helping it.

One of the best examples that I’ve personally experienced recently was at the movie theatre. Although I don’t normally partake, I decided to buy myself some popcorn. The person behind the counter asked if I wanted butter, telling me that it would be an extra charge. Many people would then opt out of the butter, but the person behind the counter never offered the complimentary margarine substitute. The margarine does not generate income on its own, but the butter does.

Further still, I used to expect the ability to douse my bag of popcorn with a variety of flavored shakers. In the past, these were left open for use at the condiment stand, the same place where you’d find straws and napkins. A few years ago, movie theatres removed those shakers, but the flavored powder was still made available from behind the counter in small Dixie cups. They were still complimentary and you could have as many as you wanted. During my most recent visit, there were no shakers at the condiment stand nor where the Dixie cups of flavored powder made available. They were not being directly offered in any way.

After I finished my movie, I noticed a small sign (only next to one of the six available cash registers) that said you could have one complimentary pouch of flavored powder with each bag of popcorn. Additional pouches, which were remarkably small, would come at an extra charge. Not only am I paying an inordinate amount of money for the popcorn itself; you have to insult me with these small extra charges for what should already be made available for free.

Can you imagine going to a fast food restaurant and being charged for the ketchup? These added costs should be factored into the purchase price. It’s all about the customer’s perception of how you run your business.

6 Comments to “Business 101: Non Revenue-Generating Products”

  • It’s not like those popcorn flavors are expensive to produce either… I can understand why some businesses want to keep their costs at a minimum, but it shouldn’t bring down the consumer’s experience either. That’s especially true for coffee shops: in a mid-size to large town, you can usually find two or three of those within a city block. If one is being too cheap, it’s very easy to go to the next building…

  • I agree with your sentiments. I do, however, work for a large retailer. I see how the rising cost of all the expected amenities is making it harder to show a profit. We may keep giving you free bags for your groceries,, but your wait in line will be longer because we can’t pay as many people to ring them up. We may all have to readjust our expectations.

  • Yes, I too have come across many companies that back on such kinds of items, because they do not get benefit whatsoever.

  • The old days of handfulls of ketchup sachets and serviettes are long gone, as the pursuit of the bottom line profit is causing most businesses to tighten their belts. Tough economic climes is causing a general belt tightening, which is filtering through everywhere…

  • This was a very well written article.

    I totally agree with you that the little not-for-profit perks add value to the overall customer experience.

    Thanks for sharing!

  • Great article. I feeling love your blog. Nice theme.
    Thanks for sharing!