I see small business people talk about the markup on their products. Most people think of markup as a ripoff. No one likes to feel that they are simply being charged a markup by a middleman. Plus, we’re used to the concept that retail markups are only reasonable to a certain percentage. My assumption has always been that the average person is comfortable with no more than a 2x markup at the retail level and usually we’re happier with less than that. Let’s get this out of the way right now, for your photography business a 2x markup isn’t nearly enough.
But hear me out. Markup is a concept for middlemen. A wholesaler buys a product for X and sells it for 2X or whatever. Think about that. The value that they are offering is access to a given product. Back in the day we needed wholesalers because we simply didn’t have access to many of the things we wanted. Distribution limitations created value. However, these days you can go online and get anything you want shipped right to you. Middlemannery simply isn’t the value that it used to be. Plus, you’re not a middleman, you actually create value and you need to be paid for the value, not the access to the product.
So we need to retire this idea that we’re “marking up” a product that we’re getting from the lab or album company or whatever. That would be true if we were literally reselling that blank print to the client. In reality, we’re selling different ways to own, display and enjoy the work that we are creating. So let’s stop thinking about reselling that raw material and instead start thinking about the margin that each sale gives us to work with. In many ways we will be working with a markup multiplier or percentage, but that’s only in order to determine how to achieve our goals. But we have to sell the value that we offer and not expect the value to be created by the lab or the album company.
Interested in understanding exactly how much margin your business needs to yield to be truly profitable? What to know exactly how to build and brand your marketing plan to earn the margin you need? Only takes three days….
Book your spot now for the upcoming SEXY BUSINESS WORKSHOPS in Atlanta and Denver.
- SEXY BUSINESS ATLANTA – June 18-20, 2012 – Artmore Hotel
- SEXY BUSINESS DENVER – July 16-18, 2012 – The Space at LoHI