I am ashamed to admit it. I’ve got some really bad habits. I blame the pandemic in part. The novelty of being able to order milk and a pack of chocolate biscuits from the local co-op and have it instantly delivered wormed its way into my brain as the ultimate time saving device.

Run out of milk?

Hop on to Deliveroo. Continue working while it’s picked, packed and delivered.

Time elapsed: 2 minutes.

Previous approach: put on shoes, lock up house, jump into car, nip to shop. Pick, pack and return to house. Unlock house, stash milk in fridge, kick shoes off under the table.

Time elapsed: 18 minutes. Ish.

But there’s a real monetary cost to this time saving. And if you’re in marketing, your pricing strategy matters, a lot.

I did a bit of pricing research on a recent direct trip to McDonald’s vs the cost of ordering via Just Eat.

Here’s the financial difference in a nutshell:

1. The product costs were 13.4% higher on Just Eat than they were going through the Drive-Thru. The difference feels negligible: £13.58 on the app vs £11.98 in the drive thru, it’s not even a couple of quid, but that additional 13.4% is an inflation beating price uplift. This is a clear pricing strategy for this channel. The costs of sale are higher on Just Eat (who load on commissions to the seller) than they are for McDonald’s own advertising. They are passing those costs on: to you, the customer.
2. The total cost of the transaction on the app, including delivery and Just Eat fees, came to £16.96. The whole transaction is now 41.6% higher than getting off your bum and driving to the drive thru. That’s astonishingly high.

41.6%

An incredible uplift in pricing. And a much bigger dent in your wallet.

But it’s only a few pound, I hear you say.

Sure it is. But if every transaction we make is subject to this laziness tax (and that’s more a reflection on my laziness, rather than a comment on society in general) then out of an average monthly income of £2480, £751 of that is potentially a laziness tax.

If I told you that you could save £751 a month just by being a bit more active in your purchasing habits, would you not grab that knowledge with both hands and embrace the change?

So we get to the thorny subject of platform commissions vs the cost of marketing.

I have a pal whom I’ve known for a couple of decades. He’s built the business I wish I’d been clever enough to build. Early doors he ditched his marketing agency model because, and to quote him, “clients were getting in the way of a good idea” and decided to do his own marketing thing, selling the solution in return for a solid commission. A no win, no fee, model.

With a nothing to risk attitude, businesses jumped at the chance to give him stuff to sell (he literally makes nothing, just markets stuff other people make and deliver) in return for a 25% commission on every successful sale. And they had to give him half price deals on top of that to make his offer unique!

It’s a genius model.

He’s now a millionaire. I am not.

His business model capitalises on the laziness of businesses to properly invest in their marketing. He’s built the database, the platform, the audiences. To succeed all he needs is a pile of businesses who just want to shift capacity with minimal effort on their part. And succeed he has.

But those businesses? Their margins are severely dented as a result. By offering a half price deal, they have immediately depleted their revenue by 50%. With a 25% commission fee to come out of that, they are now getting 37.5% of the market value of the product or service they are selling. Great for customers, terrible for businesses. They’ll get a cash boost from the initial volume sale, but long term profitability will take a hit and, ultimately, that will push their prices up as they struggle to cover overheads following their 62.5% drop in income.

62.5%.

All because they don’t want to risk 10-15% of their revenue on building their own marketing strength.

It’s a false economy. And a lazy one at that.

What’s the solution to this?

Effort. In a single word.

Everything can be less costly if you are prepared to make some effort. Literally less costly. You can save 41.6% on your McDonald’s order, you can make an additional 62.5% on your sales revenues, if you just put in a bit more effort.

And, if you’re a marketer, get your calculator out. Understanding your margins before you do the deal is a game changer. Short term tactical gains are usually just that: short term.

The next time you pick the easy option, either as a consumer, or a business, stop and take a brief moment to consider how much more it is really costing you.