There are many stories illustrate the principles of product pricing and customer relationships. Here are three of my favorites. Over the years they have appeared in many places in many forms. These are the local versions.
A Wharton alumnus had a few hours to kill after meeting with the legal representatives of his venture partners in San Francisco. To pass the time he wandered around Chinatown, and he eventually found himself in a back-alley antique shop. As he considered the objects on display, the alum spotted an exotic item that seemed particularly amusing. It was an antique bronze sculpture of a rat. The piece seemed worth owning, so the alum inquired about the price.
"Only twelve dollars for the rat, Sir," says the shop owner, "but one thousand dollars for the story behind it."
"You can keep the story," replies the alum, "but I'll take the rat."
The transaction is completed, and our tired entrepreneur leaves the store with his bronze rat.
As he crosses the street, he notices out of the corner of his eye that two live rats have come up from a sewer drain and have started to follow him. The alum keeps looking over his shoulder as he walks away, and every time he passes a sewer drain more rats start to follow him.
By the time he has walked three blocks, more than a hundred rats are at his heels.People begin to point and shout. He walks faster and faster. Soon he breaks into a trot as a multitude of rats emerge from sewers, basements, vacant lots, and abandoned cars. Rats by the thousands are at his heels, and, as he nears the waterfront, he starts to panic. He runs as fast as he can, but the rats keep following, squealing as they run.
Now, not just by the thousands but by the millions, the rats follow the entrepreneur. When he gets to the edge of San Francisco Bay, the trail of rats stretches twelve blocks behind him. In a panic, the alum climbs up a light post. Finally, grasping the lamp post with one arm, he heaves the bronze rat into San Francisco Bay.
He then watches in amazement as millions of rats surge over the breakwater into the bay. One-by-one the rats drown.
Thoroughly shaken, but unharmed, the entrepreneur makes his way back to the antique shop."Ah, so you've come back for the rest of the story," says the owner.
"No," says the entrepreneur."I was wondering if you have a bronze lawyer."
Randolph Pickering III, a Wharton graduate, moved into a country house, and, just as a lark, he bought a donkey from a nearby farmer for $100.. The farmer kindly agreed to deliver the donkey the next day.
When the farmer drove up in the next morning he said, "Son, I am sorry, but I have bad news. The donkey died."
Randolph replied, "No problem. I'll take a refund." The farmer said, "Can't do that. I spent the money already."
Unruffled, Randolph said, "Very well. Just unload the donkey."
The farmer asked, "What are ya gonna do with him?"
Randolph, "I will raffle him off."
Farmer, "Son, you can't raffle off a dead donkey!"
Randolph, "Sure I can. I just won't mention that the donkey is dead."
A month later the farmer met up with Randolph and asked, "What happened with that dead donkey?"
Randolph, "Just as I said. I raffled him off. I sold 500 tickets at two dollars a piece, and I netted $898.00."
Farmer, "Didn't anyone complain?"
Randolph, "Just the man who won the raffle, and I refunded his two dollars."
A Wharton senior walks into a South street bar and says to the bartender, "Beer for me, beer for you, and beer for everyone who is in the bar now."
After drinking, the student starts to walk out of the bar. "Hey, what about the payment?" yells the bartender. "I have no money," answers the senior. This enrages the bartender who grabs the poor student, beats him soundly, and throws him out of the bar.
The next evening the senior walks back into the same bar and says to the bartender, "Beer for me, beer for you, and beer for everyone who is in the bar now."
Now, the bartender thinks to himself, "This Wharton student can't be stupid enough to try to pull the same trick twice. Tonight he must have enough money." The bartender gives beer to everyone.
After drinking, the student starts to walk out of the bar. "Hey, what about the payment?" yells the bartender. "I have no money," answers the poor student. The bartender is again enraged. He grabs the student, beats him, and throws him into the street.
One week later the student walks back into the bar for a third time and says to the bartender, "Beer for me, and beer for everyone who is now in the bar."
Curious, but disgusted, the bartender asks, "What, no beer for me this time?"
"No," answers the student. "You get violent when you drink."