On Saturday my 10 year old son, Ethan, wanted to rent a Wii game from RedBox (Cars 2, fun game). I agreed to take him but he would have to pay for the game rental.
Lesson 1: Revenue Models
Before purchasing it I reminded him the next day was Sunday and that we wouldn’t be able to return it until Monday so we would be paying for 2 days (and we don’t play video games on Sunday).
When we got home he asked, why can’t we just pay for it today and Monday but not Sunday since we won’t play it on Sunday. You could tell the little wheels had been turning on the drive home. I wanted to help him figure out the revenue model on his own, so I asked him how RedBox would make money if they just charged for the days that you played it. He quickly realized that since we had the game during that whole time, it couldn’t be rented by anyone else.
Lesson 2: Hidden Costs
The cut off time for returning it was 9 PM before getting charged another day, so we planned on getting a Tropical Sno and dropping it off after dinner. At about 9:30 when only Ethan was still awake he loudly gasped for air in the kitchen and showed me the redbox case. We got our sno-cones but forgot to drop off the game. Knowing he was responsible for the cost of the game, he realized that meant this game rental now just cost him another $2 for a total of $6 (assuming we remember and bring it back tomorrow). Then realizing he could also play it tomorrow still, he wasn’t too sad. But it was fun seeing that “ah-ha” in his mind in talking about how RedBox makes money out of us just simply forgetting to return it. We don’t anticipate keeping it for that long, and that low barrier to entry makes it an easy buy because all you have to do is bring it back the next day and you’re out a buck or two. But forgetting to bring it back (or being lazy) is a whole lot easier after the fact.
I love opportunities to teach business, marketing, and money management lessons to my kids, and hope you’ll take advantage of opportunities like these as well.
