Founders often feel guilty about raising prices. Reframe this: sustainable profit margins are what allow your business to survive and continue serving customers. Without profitability, the business fails and everyone loses. It's a matter of ensuring longevity, not greed.
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High top-line revenue is a vanity metric if it doesn't translate to profit. By setting a high margin target (e.g., 80%+) and enforcing it through pricing and cost management, you ensure the business is sane and profitable, not just busy.
Founders often mistakenly start with low-margin, mass-market products (the "save the whales" syndrome), which makes the business look damaged. A better strategy is to start at the high end with less price-sensitive customers. This builds a premium brand and generates the capital required to address the broader market later.
Many founders run "too lean," maximizing short-term profit at the expense of long-term growth. Strategically investing in a team, even if it lowers margins temporarily, frees the founder to focus on scaling, leading to greater overall profitability and less burnout.
Don't let your personal perception of what's 'expensive' limit your earning potential. Set your price high based on the value you provide. It is easy to lower a price that gets no buyers, but impossible to know if you could have charged more if you start too low. Never say no for the customer.
In recurring business relationships, winning every last penny is a short-sighted victory. Intentionally allowing the other party to feel they received good value builds goodwill and a positive reputation, leading to better and more frequent opportunities in the future. It inoculates you against being price-gouged upfront.
Escape the trap of chasing top-line revenue. Instead, make contribution margin (revenue minus COGS, ad spend, and discounts) your primary success metric. This provides a truer picture of business health and aligns the entire organization around profitable, sustainable growth rather than vanity metrics.
When pressured to hit quarterly targets with promotions, use a simple filter: 'Does this action increase the long-term desirability of my full-price product?' This framework helps balance immediate revenue needs with the crucial goal of protecting and building brand equity, preventing a downward spiral of discounting.
When increasing prices, the communication strategy should be direct and confident. If you truly believe the product delivers value commensurate with the new price, there's no need to hide the change. Evasive language or trying to 'shy away' suggests you doubt your own product's worth.
