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remember a story from many, many years ago about the 100 Year Light
Bulb Company. Although I have not, as of yet, been able to verify
the story, as I recall, it is a true story.
What a deal!
was once a small company which sold light bulbs door-to-door that were guaranteed
not to burn out for 100 years. They called
themselves, appropriately enough, the 100 Year Light Bulb Company.
The bulbs were quite expensive, today's equivalent of $10 apiece;
but, since each bulb was guaranteed to last for 100 years, you would
NEVER have to buy another light bulb for the rest of your life!
Over time, paying $10 for a light bulb works out to be very, very
cheap since a modern bulb, costing say $1, burns for only about
30 days. The cost of the modern bulb, excluding its energy use,
therefore works out to one dollar per month. The 100 year
light bulb, on the other hand, works out to only about eight one
thousands of a penny per month! A very, very, very small fraction
of a penny per month of bulb life! You just couldn't go wrong.
over the next several years, thousands of people bought 100 year light
bulbs. When any of those bulbs burned out, the company did immediately
replace them as promised. The 100 Year Light Bulb
Company was honoring its 100 year guarantee and everything was legal
and legitimate. Word got around and thousands more people bought
100 year light bulbs so that they as well would never have to buy
another light bulb for the rest of their lives.
Tens of thousands of 100 year light bulbs had been sold and thousands of customers were happy...until...
months later, when customers tried to have their 100 year light bulbs
replaced, they found that the 100 Year Light Bulb Company had gone out
of business and closed its doors. Since the company was out of
business, there was now no one to honor the 100 year guarantee.
people decided to take the original company owners to court and sue
them for dishonest business practices and consumer fraud. It
turns out that the 100 Year Light Bulb Company, just a handful of guys
working out of a garage at one of their homes, was merely purchasing
regular, ordinary bulbs from a department store and reselling the bulbs
as 100 year bulbs at the considerably inflated price of $10 each.
The few bulbs that did burn out during the several years the
company was in business were very inexpensively replaced by the
company. The 100 Year Light Bulb Company made so much money
selling light bulbs at such ridiculously inflated prices, that even
after subtracting the cost of replacing the few that burned out, the
company made hundreds of thousands of dollars in profit.
courts found, and rightfully so, that the 100 Year Light Bulb Company
fully honored its 100 year guarantee for the entire time that the
company was in business. Once the company had gone out of
business and was no longer in existence, there was no further legal
obligation to honor the guarantee on the 100 year light bulbs. The
company had done nothing illegal.
Why am I telling you this story?
story is a reminder to not fall for hype, and to remember that a
guarantee, warranty or investment is only as good as the person or company
offering it. You should also consider this story to be a lesson
in looking at people's motives. For-profit companies are there
to make a profit for themselves--period. When you see, or receive
an offer for a product or service, always take a very hard look at the
possible motives of the seller. I'm not saying that everyone
is trying to scam you, I'm just saying that if you carefully consider
motives, it will be much harder for someone to scam you.
someone is offering a product, service or investment that seems too
good to be true, or offers you something worth considerably more than
you are paying for it, look out! Be on your guard. Think it
through and try to figure out what their motives might be. If
people had just bothered to think it through, they might have realized
that if there really was a breakthrough which could produce a light
bulb that would last 100 years, such a product would not very likely have to be
sold door-to-door as was the case with the 100 Year Light Bulb Company.
those of you who take umbrage with the fact that I cannot verify the
story about the 100 Year Light Bulb Company, here is a similar story I have verified:
the time of this writing, there is a company selling what they call the
"Infinity Razor," a shaver which is guaranteed to never dull
or need blades replaced. If the razor ever does dull, the company
guarantees to replace it free of charge--you pay only shipping and
When I first heard about the Infinity Razor, the story
of the 100 Year Light Bulb Company immediately came to mind. So,
I took a closer look at the fine print and into what their motives
might be. The razor costs about $20. For that price, they
throw in a second one for free, so I guess the razor is only costing
you $10. Shipping and handling is another $10. So, for $30
you get two Infinity Razors. If they ever dull, you send the
company $10 shipping and handling, and they send you a replacement
Something didn't seem right to me, so I did the math:
the sake of argument, let's say that the company is buying these razors
for $2 apiece. That's figuring high since you can buy a razor at
the store for less, but let's use the $2 figure anyway. Let's
also allow another $3 to ship the razor. Ignoring the other cheap
crap they throw in as a free gift, you have paid a total of
$15 per razor considering that you get two and we split the $10
between them. The company runs out and buys two razors for a
total of $4 in our example, and ships them to you at the cost of
another $3 in postage. They just cleared a profit of $8 after
subtracting their costs from the $15 you paid.
But wait...that's not all...
not, you say, since you'll never have to buy another razor again.
Well, three months later, your razor starts to get a little dull.
You send the $10 shipping and handling to the company and they
ship you out a replacement razor at a cost to them of $2 for the razor
and $3 shipping. They just cleared another profit of $5 after
subtracting their costs from the $10 you sent them for shipping and
handling. At that rate, not only can they afford to replace
razors--they want to replace razors! They make additional profit
every time someone pays to have their razor replaced. And don't
forget that, for the same $10 you paid them for shipping, you could
have run to the store and bought five razors for yourself. Do you
see their angle? Do you see their motive? Sort of sounds to
me like the 100 Year Light Bulb Company all over again.
be savvy. Learn to question deals that seem too good to be true.
You are much better off losing a few good, legitimate deals, then
to get caught in just one really bad one. This not only applies
to products and services, but even more so to investing. There is
always someone ready to smooth talk you into handing over your money
for something you only think
you understand. And sadly, many people hand over that money
having only listened to the information provided by the person trying
to get the money. Never let the only information you get be from
the person trying to sell something to you--especially in this age of
the Internet where you can do research with a few clicks of the mouse. Don't be lazy or gullible. Do your own
research before making any financial decisions. And if the
salesman tries to pressure you by telling you that you have to make a
decision right now, then use the tactic my father taught me when I was
just a teenager: If a salesman has to have an answer right away,
then the answer is automatically 'NO.'
Please know that all of the thoughts, information,
and techniques given on this site are nothing more than the author's
the matter being addressed. Do further research before making
This article copyright
© 2008 by Keith C. Rawlinson
(Eclecticsite.com). All rights reserved.
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