Don’t Give Away Your Profits

Yes, gross revenues were a few percentage points higher than last year, making this fourth quarter a breakthrough, so they say. But at what cost?

I believe many made the classic decision of enticing greater gross revenue by discounting and reducing profit. What’s the point? The rule is that net profit is more important and a better objective than gross revenues. Additionally, overhead continues to increase so reduced net profit is a bigger obstacle to successful operations. So why do you do it?

I have written much about perceived value, adding value in ways more valuable than price discounts, allowing you to keep the profit high. I have spoken about niche marketing, specialization, and super service, all supporting higher prices, greater profits and greater success. This works. There is no good end if price competition and discounts are your approach as the larger businesses can beat the smaller businesses any day. But, the bigger businesses cannot compete with small store super service, specialization and niche marketing.

Why play a game you cannot win? Focus on your own business model, figure out how to deliver perceived value, specialization, niche marketing and great service.