Businesses have fixed and variable costs. The fixed costs can be considered know-how and remain in the business no matter the sales volume. The know-how is the Capital, or sunk costs, in the business. For the business to survive, it has to make a profit, so it has to recover the cost of Capital. Hence the price of goods is profit plus variable costs plus a percentage of the Capital. The percentage of the Capital and the variable costs depends on the expected sales and the know-how. The expected sales rely on the price and depends on what other businesses charge for the same goods.
The amount of Capital going into a business depends on the expected profit, but it is often not known until the goods are produced and sold. Running a profitable business is complicated and complex and determining the price of goods is difficult.
However, we know that Capital or know-how is valuable because it is like a magic pudding. You charge for it and sell it, but it remains in the business, and you can sell it again and again while-ever it is not superseded by another business's know-how and reduced costs.
Consumer Capital provides a way of providing Capital without knowing the price of goods until sold. It also shares the profit from know-how without giving the Capital away. It does it by some consumers paying for the goods before they receive them. When the consumers finally receive the goods, they obtain a discount depending on the time their Capital remained in the business. However, all consumers receive a share of consumer capital included in the price of the goods. Consumers acquire Capital by paying for goods where the Capital is the right to buy goods in the future at a discount.
Businesses already do this as everyday rewards, frequent flyer points, or discounts on repeat sales.
Consumer Capital is a simple extension of payments and is like any goods or service rather than a financial product. Using payments to raise Capital reduces the cost of acquiring Capital. If a business requires Capital, it pre-sells some of its future products at a price to be determined.
The return on investment is in the form of a lower cost of goods and incentives consumers who hold it to reduce the cost of goods, and a way to do that is to reduce the variable costs. It hence encourages consumers to participate in cost lowering behaviour such as self-service, repairs and reuse.
Consumer Capital automatically adjusts for cost of living inflation to preserve the Capital's value. Widely used Consumer Capital will reduce GDP by reducing the price of goods and services.
Consumer Capital is widely used by minorities and families because it requires long-term trust that the business in which the capital is used will honour the promise of a return with lower prices. Giving consumers a stake in the businesses helps ensure the long-term stability and success of the approach. Finally and most importantly, the governance of the organisation can follow the Elinor Ostrum’s principles of the Commons.
