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.

While competitors use extended payment terms (net 30/60/90) to finance inventory with supplier cash, Trader Joe's pays on delivery. This unconventional choice makes them a preferred customer, giving them access to the best products, unique deals, and fostering deep, loyal supplier relationships—a significant competitive advantage.

Traditional supermarkets derive significant revenue from suppliers through slotting fees and co-op marketing. Trader Joe's rejects this entire "shadow economy," making money only when a customer buys a product. This aligns their incentives completely with the customer, ensuring shelf space is earned by demand, not supplier payments.

Unlike competitors whose store brands are cheaper versions of national products, Trader Joe's mandates that its private label items offer a unique value proposition. This could be a novel ingredient, unique packaging, or a better price on a superior item, reinforcing their brand as an innovator, not a discounter.

High margins create stability but also invite competition. The ideal strategy is to operate with margins low enough to build customer loyalty and a competitive moat, while retaining the *ability* to raise prices when necessary. This balances long-term growth with short-term financial resilience.

By paying staff up to 150% above the industry average, Trader Joe's creates a significant operating advantage. This investment leads to extremely low turnover (one-tenth the industry average), reducing hiring and training costs while fostering a knowledgeable, happy workforce that improves the customer experience.

The math behind a high-ticket offer is often misunderstood. Since these services are typically 100% margin, a small number of buyers can drastically outperform the profit from your main product. A 10x priced offer sold to just 10% of customers can double revenue and triple profits.

Use gross margin as a quick filter for a new business idea. A low margin often indicates a lack of differentiation or true value-add. If a customer won't pay a premium, it suggests they have alternatives and you're competing in a commoditized space, facing inevitable margin compression.

Pricing is your most powerful lever. For a typical service business with a 10% net margin, a simple 10% price increase goes directly to the bottom line, effectively doubling the company's total profit without any additional operational cost or effort.