How Price Determine The Success of Your Business (part1)

Price is a message!

Imagine this…

You want to start a business of a cupcake. You have done the necessary calculations. After so much stress and hassles, you FINALLY get the best cream and flavors with fantastic tastes. You buy the right mixer, the package, the container, and other materials. You are so happy! and ready to start your business in your one-room apartment.

Your cost of production per one is $50

After so much contemplation on your price margin.

You decided to sell it at $70

Price of the product — the cost of production = profit

$70 -$50 = $20 (profit).

Your sales are doing well, every day you sell like 30 cups.

You are happy, everything is going as planned. Until when there is inflation, your cost of production increases to $70. You have no choice but to increase the price of your cupcakes. You scared you don’t want to lose your customers that are used to buying your cakes at $70.

Finally, you take the bold step, you increase the price to $90. Your customers begin to complain about your price. They can’t afford to buy your cupcakes anymore because it is beyond their budget or completely out of it.

If you ask why?

The response is always like; “don’t you see there is inflation Dumb ass!” your daily sales drop from 90% to 5%. You are depressed. It looks like your whole world is crumbling. Your dream business is dying slowly. Eventually, you are out!.

Nobody is buying and you are in DEBT.

This is the fate of anybody who structured their business around PRICE.

The growth of your business depends on your price margin. Your price margin determines the type of customer you attract. Your type of customer determines the success of your business.

Now picture this…

You have a cupcakes business, you rent a small store along the street. Your cost of production is $100. And you sell your cupcakes for $500.

$500 — $100 = $400 profit.

You are doing well, you sell at least 50 cups per day.

And there comes inflation. Your production cost surge from $100 to $200. You got no choice; you increase the price to $600. Your profit is still $400. Despite the inflation, your customers keep coming and never complain of the price tag of your cupcakes.

Why?

What is the difference between these two stories?

Which character would you like to play in real life? The first or the second?