Between a business and its customer there are four possible conditions of exchange, and most successful businesses sit in the third. The source calls it barely comfortable, so a business that delivers exactly what was ordered can hold steady for years without growing.

The four conditions

The source sets out a scale of four conditions, and it is worth reading them in sequence:

  • Rip-off: money is taken and nothing is delivered in return.
  • Partial exchange: only a portion of the order arrives, or a spoiled version of it.
  • Fair exchange: exactly what was ordered is delivered.
  • Exchange in abundance: the customer receives something worth more than the money they paid.

Of the second condition, the source says it amounts to running into debt. The group takes in orders or money, delivers only part, and ends up owing more and more, in service or in goods.

Of the third, it says this is what law and business practice recognise as fair exchange. You take in an order and money, and you deliver exactly what was ordered. According to the source, most successful businesses work on that basis.

Suppose an installer bills for a finished job and leaves the cleaning up to the customer. That is partial exchange, even when nobody complains.

A designer who delivers exactly what was agreed, on time, is in fair exchange. And a garage owner who hands the car back washed is in exchange in abundance, at a cost of four dollars.

Why fair is not enough

Here comes the sentence that turns the chapter over. The source admits that the third condition is considered honest, is socially acceptable and is entirely legal. It gives a rather level progress, and the source says that it does not guarantee any expansion or improvement, either for a group or for the lot of a person.

In the source's own words: “It is barely comfortable.”

Fair exchange has no flaw in it. It is honest, legal and accepted, and no customer will complain about it. Its only problem is that it guarantees no expansion, for the business or for the person behind it.

That is an exact description of many small businesses. They deliver precisely what they promised, on time and without complaints, and they stay the same size year after year.

Suppose a carpenter has delivered exactly what was ordered for ten years. There are no complaints, no recommendations and no growth.

Now suppose he starts adding a bag of spare screws and a card with care instructions to every order. The product stays the same product, and suddenly people talk about him.

The fourth condition

The source states the fourth condition as an instruction. Produce in abundance, and try to give better quality than expected. Deliver and get paid for it, certainly, and deliver better than was ordered, and more.

The fourth condition gives higher value at the same price, and usually the cost to you is small. The source expressly rules out two-for-one offers and service handed out at no cost. A discount and a gift are not the fourth condition either.

The source's example is exact. A customer who orders an average diamond gets one that is above average, delivered “promptly and with courtesy”.

Promptness and courtesy cost next to nothing, and few businesses offer either.

Suppose a consultant sends a written summary after every meeting. It takes her ten minutes, and her clients quote from it months later.

Or take an installer who arrives at the start of his time window instead of at the end of it. The work and the price are the same, and the experience is completely different.

The opposite direction exists too. A supplier whose excellent product always arrives a week late sits in the second condition, even though the product itself belongs to the fourth.

The fourth condition means giving better, and promptness and courtesy are part of that.

Why this is a chapter about money

This scale ties directly to income. According to the source, the condition you settle into sets your ceiling.

It connects with two short sentences from the source. On marketing: you find, strengthen or create a demand. On economics: you supply a demand or you do not, and you are adequately paid for it or you are not.

The first sentence is about the road to the customer. The second is about what happens after the customer arrives, and in other words it is exactly the four conditions of exchange.

Suppose a business owner complains about market prices. He is in the third condition and wants the prices of the fourth.

Or take a studio owner who adds two things that cost her twelve dollars between them and raises her price by 15 percent. Nobody leaves.

So a business that wants to charge more can begin with one question: which condition of exchange is it in today?

The booklet gives this chapter two short exercises, a diagnosis and a creation.

A business that does exactly what it promised is an honest business. According to the source, it is also a business that stays where it is, and the way out runs through small things that cost little and are delivered promptly and with courtesy.

The booklet is general knowledge, not financial advice for your business.