She sent me this comment and diagram:
I checked out your blog and am very curious about your pricing discussions. I’m a small business person new to pricing products – making my way into a new business after years in hi-tech. I’ve looked at my issues from so many angles and have changed my approach several times. There’s nothing cast in stone about it, it seems to me.
As I read your latest post of your email exchange with Dieter Brandes, I saw this drawing in my head as possibly the barest kernel you guys are discussing.
It’s not about making a margin. It’s about bringing in a certain amount of money (pink) selling whatever products (type of product, end price, % profit per item or type of item, quantity of product sold is immaterial to this discussion). So, it can be acceptable to have a product (E) that you sell a lot of, make very little off each one, but the sales of E overall adds significantly to what you bring in. (guess I shouldn’t have colored it pink ;)
Anyway – just curious if this is one of the points you’re trying to make.
I suspect trying to make every product be sold at the same % profit makes it easier to run the store ;) Also, this method requires maybe more rigorous cost calculations to make sure they’re representative?
Thanks for your blog thoughts – and your comments.
Laura
www.lauramappin.com
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ME: Is this the point I am trying to make ? Comments and criticism are welcome.
E-mail: ajbrenninkmeijer (a) cs.com
Don't these leave out the fundamental point of sqm? If space is fixed, you will increasingly trade out one for the other. Furthermore, it also seems to ignore working capital. Both of these factors could lead a central organization to give a guideline GM% as a way of shorthanding to buying teams these factors... no?
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ReplyDeleteLaura Mappin here - Thanks, John. I would love to see a 3D modeling of things that incorporate the points the anon comment brings up. Really, though, if you hadn’t narrowed down things especially to that very simple and exaggerated wine bottle example, I would not have been able to change that simple core thought. I can now build on that.
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