Genius Business Models

It's no secret that Daniela and I like pizzas from Domino's. We've ordered it about twice a month since I got back from Japan. It's always been cheap, it's delivered right to your door, and it's basically junk food. What's not to like? They had cheeseburger pizza for a while, they currently have a white garlic sauce option, and for $.50 extra, they send you a little tub of ranch dressing for your crust. Dipping your crust into Ranch dressing is big on the West Coast and Daniela put me onto it. It's awesome. I'm not here to sell you on Domino's pizza though, I want to cast some light on their genius business model. I'll call it the 'drug dealer' model.

Until recently, we've been able to find coupons online that knock off like $10 per order. The coupons vary by location and time of the year, but we liked a coupon in Vegas for two two-topping medium pizzas for $14.99. By trolling retailmenot.com, I can see that there was once a coupon for a large one-topping pizza, 1 bread side, and a 2 liter bottle of Coke for $12.99. Regardless of the time of the year, we were always able to find a coupon online that would just reduce what we were paying without changing what we wanted to order.Since relocating to Boston we've noticed all the awesome coupons are gone. Now the best thing online is a deal where you can get a one-topping medium pizza for $5.55 but you have to buy three of them. That's fine, but there's a huge difference between a one and a two-topping pizza, and what the hell do we need a third pizza for? To recreate our old orders of two two-topping medium pizzas, cheesy bread and a bottle of coke, we'd have to spend $29.18. That's not a lot of money, but as a percentage of the cost, it's a huge jump compared to what we were paying just a little while ago.

So here's the model: create a product made entirely out of cheese, grease, and meat because those things are as addictive as crack but not illegal. Then price it out at $20 a pop but give everyone a coupon that makes it only half that. After everyone gets addicted to your product, lose the coupons and jack the price back up. What makes that especially genius is that you're not even jacking the price up because the pizzas were always $20. They're just not heavily discounted now. If I can trust movies, then I know this is how crack is sold. Genius.