I always enjoy these discussions that indicate that somehow we honor bound to not make much money by keeping our prices low.
As it is in virtually any other industry, the market rules the prices. If most everyone else sells a certain widget for $1.00, then why wouldn't you?
Does it really make any difference if your costs are lower, or your needs are lower?
So, we all seem to agree that Michael's regular prices are higher than ours (although, I doubt if many of us really know this first hand). How smart is it, then, that our regular prices should be that much lower that even after 50% off, our prices are still lower? Is that really a sound pricing structure?
I would not be bragging about being lower priced than Michael's to us. If it were truly accurate, and it were profitable (and I have to question both assumptions)then you have the perfect marketing strategy to capture the market.
Cheaper Than Michael's. What a great catch line! I would answer my phone with it, I would use it in every ad, It would be plastered in my front window.
We all know how deeply ingrained Mchael's promotional efforts are. The 50% factor so richly resonates with many, many consumers to the point that even their competitors have adopted similar promotions.
So, again, what is so distasteful about jacked up pricing? Do you really want to see who has the higher level of consumer approval?
Run a test survey: Ask your clients if they have a more favorable response to A) 50% off a Michael's or B) that you multiply your costs by 4 times?
Jacked up pricing? Get over it. Figure which concept might yield higher sales and profits or which one matches your sensibilities?
Of those two responses, are you trying to sell to consumers, at large, or to consumers just like you?
Hey, it's your business and you can gain the self imposed "high ground". I'm just afraid you might get a little lonely at the top.
It is your business, and I have no reason to tell you which direction you should take. Just understand the very predictable results you are forcing your business into if you ignore the real forces in the marketplace.
To me, the high ground is to capture enough profit to turn that profit into whatever can do the things that accomplish something really worthy of the "high ground".