Penny-Wise Still Means Pound Foolish

When I was a hot shot youth careening around my neighborhood on my groovy dark-blue bike with the wicked cool banana-seat, one of my favorite stops was the Penny Shop on Main Avenue. All of the 800-square-foot storefront was full of bins of various candies and other sweet delights, every single one homemade by the proprietors, Wolfgang and Helga Schmidtt. The Schmidtts had brought their incredible candy-making abilities to my hometown from Colon, Germany, many years before and ran a modest business on the town’s main street.

My absolute favorite activity was to get home from school, hop on the bike and pedal over to buy 25 cents worth of red quarters, which were dropped ever so gingerly into a tiny brown paper bag by Helga as I waited in rapt anticipation. Red quarters are a heavenly rewarding licorice that I could hold under my tongue as they melted, sending my mouth into a sweet euphoric stupor.

Eventually, my praises of the Penny Shop traveled so far and wide that all my friends became frequent visitors. Even my mom became a disciple and would buy large boxes of the divine confections for special occasions like Father’s Day and Thanksgiving.

One Christmas Eve when we were having a particularly large group of guests over, my mom actually bought two of the Schmidtts’ largest confection boxes. Well, she tried to, anyway. The two boxes were just a little more money than Mom had left in her wallet so she pulled out her checkbook to write a check.

“No checks, just cash,” said Mr. Schmidtt, in a deep baritone voice.

“Oh Mr. Schmidtt, I don’t have enough cash with me. Could I just give you a check just this time?” Mom asked softly.

“Oh, so sorry,” he replied, “no checks, just cash.”

Mom made a few other attempts at a compromise with Mr. Schmidtt. She reminded him, in that nice way that only mothers can, that she and her family had been long and good customers and that Mr. Schmidtt knew where we lived.

“Yes, yes,” he agreed, “you are wonderful customer—great, best customer. Thank you for business. So sorry. No checks, just cash.”

Of course, the Penny Shop did not accept credit cards and debit cards hadn’t been born yet. So Mom asked Mr. Schmidtt if she could use what cash she had and give him the rest in a check.

“No,” said Mr. Schmidtt, “no checks, just cash. Buy one box now, come back for the other.”

If we wanted the rest of the candy—by now a Christmas staple and tradition for my family—we were going to have to go and get the cash and come back. Normally this would have been a mild inconvenience, but on Christmas Eve, with lots of small errands and last-minute shopping to do, it was really going to hurt us time-wise.

So we did a few of those errands, stopped at the bank and headed back to the Penny Shop. I was ticked, but my Mom took it more in stride.
”Mom, aren’t you a little annoyed with the Schmidtts?” I asked her on the ride back. “I mean, couldn’t they have let us give them a check?”

“No, I’m not really,” she answered. She stopped to ponder this for a minute as I noticed the reindeer pin sparkling on her coat. Then she continued. “The Penny Shop has to have rules and the Schmidtts are the proprietors. They get to make the rules. They have the right to decide what kind of customers they want and what type of payment they will accept. I wish they had made an exception so we didn’t have to go all the way back, but it’s their shop and they get to decide how they get paid. That’s a rule of business,” said my mother, triumphant that she was teaching her little boy a business lesson.

My Christmas visit to the Penny Shop of 44 years ago came flooding back to me last week, when I read that Safelite Solutions was now going to deduct a 1-percent tariff from any non-electronic payments it makes to glass shops. If you remember a number of years ago they tried to do something similar and then backed off when their legal counsel warned them against it.

And I find it interesting that the fee is one percent of the invoice—I guess it costs them more money to process a manual check for $200 than $199. Yeah, right.

It’s amazing how the rules of business have changed—or maybe they are just different in the auto glass industry. Here, the customers get to decide how they pay you, when they pay you and what they want to pay you. Can you imagine any other industry where a customer can say “Hey, I am going to pay you electronically, and if you want me to pay you another way, I’m going to deduct a fee for it?”

Can you imagine any other industry where your customer chooses you and you have to call a competitor to get authorization to do the job? And that competitor says “Uh. Oh … by calling me you are agreeing to my pricing and terms?” I guess my Mom’s business lesson was way off because in the auto glass industry it’s the CUSTOMER who decides those business terms, not the proprietors.

If you have an agreement with a network, you are at their mercy. You signed it and you live by it. But if you do not have such an agreement, I wonder why more of our businesses don’t just follow the Schmidtts’ example and say “It’s my business and I get to decide, not my customer.”

I would have liked to see the Schmidtts own an auto glass company. I have a feeling they would have gotten their payments the way they wanted them, without any deductions by their customers.

Now that would have been sweet.