This policy explains the strategic reasoning behind declining Condo Care's $25 offer and accepting Jessica's $5 contract price. Understanding this principle is critical for protecting our business model.
I want to discuss the Condo Care order. I know it looks unusual. We declined their offer of $25 per logo, and now we're doing the same work for Jessica (our contract customer) for only $5 per logo. On the surface, it seems like a bad deal for us. I want to explain my reasoning because this decision wasn't about a single order—it's about protecting our entire business model for the future.
It's important to understand that we operate two very different kinds of businesses under one roof, with different types of customers for each.
When a customer like Condo Care contacts us directly, they are a retail customer. Our main goal with retail customers is to sell them the full package—the jacket and embroidery. That's our core business model.
We earn a healthy 40% profit margin on the jacket, which is vital for our company's profitability. The $25-$30 price for 'embroidery only' is intentionally high; it's a strategic price designed to cover not just the stitching but also the retail services we provide:
It's priced to make our complete package the best and most logical choice for the customer.
Jessica is a contract partner, not a retail customer. She sells promotional products and uses us for production.
We offer her a much lower price because she handles sales. She:
We aren't providing retail service to her; we're selling our machine time and expertise in bulk. The $5 price is reasonably profitable because it's a high-volume, low-touch transaction.
The real question was never about doing the job for $25 or $20. It was: do we protect our profitable business model or let a customer establish a new, unprofitable one for us?
If I had accepted the $20 from Condo Care, I would have set a new precedent. It would signal future customers that they can bypass our core business, buy cheap jackets, and still demand a low price. This would eliminate our most profitable part: the 40% margin on the garments.
We would become a low-margin job shop, constantly competing on price—a race to the bottom.
Customers solely focused on the lowest price often aren't the best long-term fit. They don't see the value in our services, quality, and convenience.
By sticking to our price, we focus on customers who appreciate our full package and are willing to pay for it. Losing some price-driven shoppers is a small sacrifice to protect our long-term profitability.
To be clear, we aren't doing this job for Condo Care for $5. Our customer in this situation is Jessica.
We are fulfilling our wholesale pricing agreement with her as our partner. She opted to work with Condo Care for a smaller profit margin. We're simply completing the contracted work for our contract customer.
Retail Customer: Condo Care (if they had accepted our $25 price)
Wholesale Partner: Jessica (our actual customer at $5)
End User: Condo Care (Jessica's customer)
Standing firm on our retail price was the right choice. It was a strategic move to protect our brand, profits, and the value of the full-service experience we provide.
I need you to understand these reasons so you can confidently explain our value to every customer.
They'll see that the grass isn't always greener elsewhere, and when they realize the true value we offer, they'll come back as customers happy to pay our price.
Erik Mickelson
Operations Manager