The Unified Theory
of Web Economics

and the Science of Selling Gas

Copyright 2006
By Lin Stone

.

Little Bo Peep had a BC Hornblower service station on Main Street in Sweet Rose Arkansas. He was keeping his rent paid and his family fed until a Sav*Mart SuperCenter moved in and dropped the price of gas by three cents a gallon below his.

After watching 22.7% of his customer base dwindle away Little Bo Peep fired off an email to the Horneblower conglomerate headquarters office in Rome and asked for permission to drop the price of gas by three cents so his station could compete. All right, he was told. But it won't work. They got this idea from J. D. Rockefeller and there is just no beating the system on price alone. You'll have to figure something else out.

And it came to pass that Little Bo Peep did drop the price of gas by three cents a gallon so he could compete with Sav*Mart. Two hours later he saw their gas prices tumble downwards by another two cents.

Hmm, said Little Bo Peep to himself. I will have to figure something else out.

 

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And it came to pass that even though he cudgeled his mind sorely all that day Little Bo Peep still had no answer to his problem by nightfall. Then he thought to himself, Well, they close up at midnight. I'll open up at midnight and make my gas available all night long.

That was a good theory, but it wasn't unified because in Sweet Rose Arkansas, after midnight there isn't enough traffic to shake a stick at. In fact, Little Bo Peep spent most of the night blogging his problems to the world. A ton of sympathy poured in but it wasn't until 06:07:17 that a message hit his mail box that changed everything.

All you have to do is put up a sign saying you'll give a spam filter to any customer that fills up his tank. I have one you can buy for just $10, but you get free resale rights with the package.

Hastily, Little Bo Peep wrote back. With resale rights I can give this $10 product away as many times as I want to and it won't cost me anything.

YES!

It was amazing how much this one word galvanized Little Bo Peep's wallet. Of its own accord it leaped into his hands and he whipped out his credit card. Ten Dollars to Ad Valorem for one Spam Filter with resale rights. Thirteen seconds later the package was in his hands, or at least on his computer screen. He whipped out a brush and canvas and made up a sign for the side of the road. $10 Spam Filter Yours FREE when you fill up your tank.

Just minutes later a motorist whipped in and said, I'm going to fill 'er UP! So give me one of them there spam filters.

Little Bo Peep stopped dead in his tracks. How was he going to deliver the spam filter? Back in the old days you put software on a floppy disk and handed it out. Little Bo Peep's computer did not have a floppy disk bay. Besides, a floppy disk cost fifty cents each. That was no go. He lit up the monitor and fired off an email to Ad Valorem, asking for a solution.

Oh, that's simple, he was told. Just send it to them by email.

  

Now, why didn't I think of that? He wondered. He went out and explained to the customer how delivery would be achieved. The customer responded with a growl: I m trying to get rid of email, not give someone else my address so they can flood my box with hot offers I don't want to see.

After thinking for a moment Little Bo Peep came up with a solution. I promise that your name won't be sold or rented to anyone else.

That's not good enough, the customer responded.

Okay, I promise to delete your email address from my computer immediately after the software has been sent to you.

After the sale was consummated Little Bo Peep glanced at the clock and realized it had taken five whole minutes to explain the deal to his customer. The next one might take ten. It would be better to give them the three cents a gallon and take a loss, he concluded.

And it came to pass that he went forthwith and dropped the price of his gas by three cents a gallon, then took his sign down that offered a free spam filter. Twenty minutes later Sav*Mart dropped their price by yet another three cents a gallon. Little Bo Peep went back out and raised his sign offering a free spam filter with every fill up.

The very next vehicle that came in was a Cadillac SUV. Boy have I ever got a deal for you, the driver said as he came into the station. You fill up my gas tank and I'll give you a spyware stripper that sells for $49.

$49 worth of gas won't even get you out of Sweet Rose, Little Bo Peep responded indignantly.

No, the customer admitted. But you get resale rights with the package so actually you are getting $99 worth of merchandise.

With resale rights I can give this $49 product away as many times as I want to and it won't cost me anything?

That's right, said the customer. You'll be making 100% profits every time you make a sale.

Little Bo Peep shook his head negatively. No, I don't think so. There's not enough margin there for me.

And it came to pass that the customer grudgingly added a kicker. Tell you what, I'll also sell you the rights to sell resale rights with the package you get. Any time you can sell resale rights as part of the package you can double the price of the software. That gives your package a value of $199, and the package you give away with every fillip will be worth $99.

How do I know it will sell? whined Little Bo Peep.

You bought it, didn't you? came the question back. Little Bo Peep could see the logic there. He nodded. The customer grinned and went out to fill up his Cadillac.

 

Up went another sign offering a $49 spyware stripper FREE with every fill up purchase. By noon the traffic at Little Bo Peep's service station was back up to normal. But by the end of the week he realized it was plunging again. Why haven't you been back in for gas? he asked a customer who was (or had been) a lifelong friend. Why would I need TWO spyware strippers? asked the customer.

And it came to pass that after Little Bo Peep had thought for a moment he said, Well, when you get the second one I'll throw in RESALE RIGHTS. You'll earn 100% profits on every one that you sell.

With resale rights I can give this $49 product away as many times as I want to and it won't cost me anything? asked the customer.

YES!

How do I know it will sell? whined the customer.

You bought it, didn't you? Little Bo Peep reminded him with a grin. The customer could see the logic there. He nodded.

Thus it was that Little Bo Peep made it through another week with enough money to pay his rent and feed his family.

Then Sav*Mart lowered the price of gas yet another three cents. Furthermore, everyone in town had a spyware stripper was and trying to sell a copy to their neighbors for Ten Bucks, with NO takers.

Woe, oh woe is me, Little Bo Peep blogged to the world. What am I going to do now?

Ad Valorem rushed to the rescue. I have a web site builder valued at $197 that you can have for only $50. You can give one away for free to every customer you get.

I've tried that before, Little Bo Peep wailed. In a little town like Sweet Rose the market gets saturated pretty quick.

That's okay, said Ad Valorem. You can REBRAND this software package. Inside the package your customers will find three terrific offers selling for $10 each. YOU make $7.50 per sale from a package that doesn't cost you anything to reproduce.

Three whole weeks went by before Little Bo Peep was blogging for help again. Tell you what, said Ad Valorem -- I'll sell you the rights to sell rebranding rights to the software you already have. Your customers will find three terrific offers selling for $10 each inside the package. All you have to do is tell them they can earn $7.50 per sale from a package that doesn't cost them anything to reproduce.

How do I know it will sell? whined Little Bo Peep.

You bought it, didn't you? came the question back. That made sense. Little Bo Peep nodded and swung into action.

As the months went by Little Bo Peep acquired resale and rebranding rights to hundreds of software packages.

They have dropped the price of gas ten cents per gallon and I'm still selling more than Sav*Mart! He bragged to his wife.

She laughed. Yes, but I keep saying that if you'd just give away a hundred dollars worth of new software with every gallon of gas purchased that you could put them out of business once and for all.

the end

Bio: Lin Stone is the author of thirty three books and has published numerous articles in magazines and on the web. His home base is established in Noble, Oklahoma but he travels extensively to fulfill his writing obligations. StoneSoup provides a long list of those articles and books of his that you can pick up for free.

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