What Should a Business Refuse to Sell?
By Aldridge Dagos, operations software engineer
Before you charge for a better experience, decide what you already owe the customer.
Imagine taking a watch to a repair shop. You agree on the work and the price. The watchmaker expects to finish on Friday. On Thursday, you receive an offer: for an additional fee, you can get a progress update and a confirmed completion date. Without it, you will hear from the shop when the watch is ready.
The offer has found a real need. You would like to know where your watch is. It may even find buyers. But something about the transaction has changed. The shop is now selling reassurance about a commitment you thought it had already made.
Change the offer slightly. The watchmaker can arrange an additional evening session, paid at an agreed rate, and return the watch on Wednesday. Friday remains available at the original price. You can see what the extra payment buys. The watchmaker supplies additional work, you receive an earlier completion, and customers who chose Friday keep their place.
Both offers can be called premium service. The name conceals the decision that matters: whether the business is adding something valuable or making an existing promise less dependable for people who decline to pay again.
Finding willingness to pay is part of developing an offer. It does not establish that the offer deserves to exist. A person can be willing to pay because a service is excellent. They can also be willing to pay because their watch is behind your counter and they would like the mystery to end.
There is a respectable case for selling better service. An owner cannot offer unlimited attention at one price. Some customers need a longer consultation. Others need a delivery arranged around an unusual deadline. Charging for that work can make it possible to provide the extra care without asking every customer to fund something they do not use.
The worker matters here too. A promise of personal service can become an expectation that someone stays late for free. If a business sells an evening appointment, the price should support the person giving up the evening. A premium can make the exchange more honest by putting a cost on a request that would otherwise arrive dressed as a small favor.
An owner should be able to explain what the basic purchase includes before asking a customer to compare it with a more expensive offer that may suit their needs better. That is hard to do when the meaning of basic changes after the money has been taken.
Michael Sandel explores a wider version of this problem in What Money Can’t Buy, published in 2012. In the book’s opening discussion of paid queue-jumping, he asks what changes when access is allocated through payment rather than another rule. His argument considers the purpose of the activity, not only whether a buyer and seller agree on a price.1
That is a useful way to think about a business offer. A shop can agree to sell priority, and a customer can agree to buy it, while somebody else experiences the cost. If the work is unchanged and capacity is fixed, moving one job forward may push another back. The customer buying the upgrade sees the benefit. The customer who has been displaced may never learn why the original estimate slipped.
There is no free afternoon hiding inside the priority label. Someone has to provide the time, wait longer, or accept a different promise.
Where the time goes 01
Priority can move a cost or fund more capacity.
One bench, arrival order
Finish: A 9:20 · B 9:40 · C 10:00
Each customer keeps their place.
One bench, C buys priority
Finish: A 9:40 · B 10:00 · C 9:20
C finishes earlier. A and B each finish 20 minutes later.
An extra bench for C
Finish: A 9:20 · B 9:40 · C 9:20
A and B keep their times. C uses a separately staffed bench.
Adding capacity can change the argument. The repair shop might reserve evening appointments for express work and pay the watchmaker properly for them. It might buy a second piece of equipment that removes a bottleneck. The premium then helps fund a service that would otherwise be unavailable. That still needs to work in practice. Calling a fee a capacity charge does not establish that capacity was added.
But it would be too easy to declare that every customer should simply wait their turn. The ability to wait is unevenly distributed. A person who can return next Tuesday has options that someone leaving town tomorrow does not. First-come-first-served is a rule with consequences, just as paid priority is. Neither saves the owner from deciding what the service is for.
A watch repair is also different from an urgent medical need. A limited edition object is different from correcting a billing mistake. The fact that people pay more for earlier access in one setting gives us little guidance about what they should have to purchase in another. We need to examine the particular relationship and what each party has already accepted.
One clue comes from how people judge price changes. In a study published in 1986, Daniel Kahneman, Jack Knetsch and Richard Thaler asked people in Toronto and Vancouver about hypothetical commercial decisions. In one scenario, a shop raised a snow shovel’s price from $15 to $20 after a snowstorm. Of 107 respondents, 82 percent judged the move unfair.2
Those were reported judgments in historical telephone surveys. They did not establish what customers would buy, and they were not a universal ruling on prices. The study also explored circumstances in which respondents were more accepting of changes made to protect a firm’s earnings. The reason for a change mattered alongside the amount.
For an owner, this suggests a more useful conversation than assuming customers dislike profit. A customer may accept that the watchmaker needs to cover rising costs. They may object when the shop discovers that uncertainty about their property can support another charge. The same customer can believe the business deserves a living and believe a particular fee is taking advantage of them.
The owner may disagree, and sometimes should. A price that customers remember fondly may never have covered the work. An early offer may have been subsidized by unpaid labor. Keeping it forever would make the business’s survival depend on someone’s continued willingness to absorb the loss. Familiarity cannot turn an unaffordable promise into a sustainable one.
That is a reason to revise the offer openly. Explain what the new service includes and what it costs. Give existing customers a fair account of what happens to commitments already made. A difficult price conversation can respect the buyer more than a cheap headline followed by charges they discover only after they are committed.
There is no requirement to expose every private expense. The customer needs enough information to understand the bargain, not unrestricted access to the owner’s accounts. If the shop charges more for a rush job, it can explain the extra appointment and the completion date. The explanation should tell the customer what will actually happen if they pay.
I would judge an upgrade partly by the experience of the person who declines it. Can that person still receive the service they bought without being made to feel foolish for choosing the listed price? Can the employee explain the difference comfortably? An offer is easier to defend when its value survives a plain description.
Consider two ways our watch shop could handle communication. One includes a completion estimate and a notice if that estimate changes. The paid option adds a lengthy consultation about restoration choices, with photographs and time reserved for questions. There is extra work to point to, and a customer with a straightforward repair may have no need for it.
The other shop leaves ordinary customers chasing unanswered messages while selling an upgrade that promises a reply. Its cheapest service may look attractive on a comparison page. Once the watch is in the workshop, that low price becomes a less useful description of what the customer must spend to feel comfortable proceeding.
The distinction is especially important when something goes wrong. Suppose the shop damages the watch and offers priority complaint handling for a fee. The new service would have demand for a reason the business should be reluctant to celebrate. Correcting a problem the shop caused belongs inside its responsibility for the work. It should not become an occasion to sell its way back to that responsibility.
This does not mean every dissatisfied customer can name their own remedy. A business needs reasonable boundaries. If a buyer changes their mind about an agreed repair halfway through, the new work may deserve a new charge. If they expect an immediate answer at midnight, the owner can decline or offer a separately staffed service. A clear refusal can be more respectful than a promise that quietly spends someone else’s sleep.
The employee at the counter needs those boundaries as much as the customer does. Without them, the person delivering the service has to negotiate the owner’s philosophy one irritated conversation at a time. An offer that makes sense on a pricing page can be miserable to explain when a customer asks what, exactly, their first payment covered.
There will still be difficult cases. A premium tier can subsidize a useful basic service. A standard service can be too generous to survive. Charging for scarce time can help distribute it, while also excluding someone who needs it more. Business judgment begins when several legitimate interests cannot all get what they want.
The owner should be able to name what the extra payment changes and account for what happens to everyone else. That will sometimes support a higher price. It may also reveal an attractive source of revenue the business would be better off declining.
Return to the customer waiting for their watch. They may happily pay for careful restoration or an appointment that fits a flight. They may prefer the ordinary repair and collect it on Friday. Either way, the shop has an opportunity to make the transaction feel complete.
The customer who chooses Wednesday pays for Wednesday. The customer who chooses Friday should still get Friday.
Footnotes
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Michael J. Sandel, What Money Can’t Buy: The Moral Limits of Markets (2012), official publisher excerpt, “Jumping the Queue”. ↩
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Daniel Kahneman, Jack L. Knetsch and Richard Thaler, “Fairness as a Constraint on Profit Seeking: Entitlements in the Market”, American Economic Review, September 1986, pp. 728-741. Snow-shovel question: p. 729. ↩