Pay your customers to not use your product

I was listening to NPR this morning and heard an awesome story. Local utility Puget Sound Energy has found its cheaper to offer customers rebates than to build new equipment to keep up with demand. This caught my ear due to the novelty of the idea. The idea of paying your customers to not use as much of your product as they used to seems backwards but, if your product is critical, it may offer you the ability to increase prices and improve margins and margins can make or break you as a company.

Would you rather have 100 plants that you have to build, maintain and rebuild that make a 1% profit or 10 plants that you have to build, maintain, and rebuild but you can make a 10% profit? The same overall income, but far less risk and far fewer headaches.

I can’t think of any other immediate parallels to this great concept of paying your customers to use less of your product so you can build margins, but the idea seems fantastic to me. PSE is very generous with their rebates, I’ve taken advantage of them myself when I bought my new water heater. I don’t know if they do this to increase profits down the road or just to provide a great public utility service but, the point is, it doesn’t really matter. If they can provide rebates that allow me to reduce my power consumption by 50%, I’d happily pay 2x for my energy. Its neutral to me from a money standpoint and it makes me feel better because I’m doing what I can to save the environment.