Doing business in the business world today is a balancing act. Just the right amount of profitability is the key. And the key thing to remember about setting your product’s price is that: you can always come down. Too much profit and you won’t get an audience, too little and you will be complaining about the business. Greed can keep you out of business but being too aggressive can put you out of business.
The company I like in the food business is Costco. Their no bones approach to 14% margin is right on. They seem to find great quality products and they get their margin every day of the week. Recently, I met with an account that wants 40 points and the quality, as a rule, is one step above salvage. You can’t price a food product at a price that will sell and have someone make 40 points and have offer quality.
Unfortunately, I ran into a couple of recent situations where we a chased new business opportunity to the point where we lowered the price to one where an extra charge (freight stop charge, fuel surcharge, over-redemption) caused the margin to go into the red. Note to self: there is always another charge.
Work hard, work smart and price your product right (not too high and definitely not too low). A well thought out pricing strategy that you stick with will go a long way.