Originally posted by Frugal Framer:
"Have you seen Tru-Vue's pricing for profit program on CD? It will help make the decision on markup and help with the decision on making CC default."
Is it the same recommendation they've been preaching at trade shows the past couple of years?
That is, mark up the expensive glass products less than regular glass; you can still make more profit dollars because the retail price is higher, even though you make less profit percentage.
While that is true, it is generally bad business. Any banker or financial analyst will remind you that a primary indicator of a business's direction is its profit expressed as a percentage of revenue. Tru-Vue's pricing recommendation causes a *direct* reduction of profit percentage.
In other words, $2.00 profit on a $10.00 piece of glass is 20% profit; $3.00 profit on a $20.00 piece of glass is 15% profit; a 5 point reduction in profit percentage.
If your banker notices that your profit percentages have dropped in recent years, even though your revenue and profit dollars have been increasing, he/she will ask what's going on. That's a danger sign -- you're selling more and enjoying it less.
With Tru-Vue's recommended pricing strategy, we're simply giving Tru-Vue our profit. They seem to like the idea.
Tru-Vue "TruGard" is our default glass. We sell it close to the markup we used to have on regular glass, and help customers justify the added price by informing them of its benefits. At the same time, we increased our markup on regular glass. It's still cheaper, but the difference is smaller.
I would sell more Museum glass if I cut my price by 20%, but I won't suffer that blow to my bottom line.
