In order to maximize profit, most business people tend to add a high profit margin to the actual cost of their products. However, I am convinced that for any business to thrive, it must reduce its profit margin per unit product (also known as contribution, but I do not want to make this too technical, so let’s keep calling it profit margin).

 By reducing your profit margin on your product, you reduce sales price and ensure that your products sell quicker in the market thereby freeing cash for you to purchase new stock. This will make you even more popular with your suppliers because there are fewer things that they love more than a customer that has a high turnover and makes frequent purchases from them.

 This will usually lead to discounts for your business, because the volume of your purchases will be higher than other companies that focus on having a high profit margin on their products. Your suppliers may even sell to you on credit to encourage you to buy more.

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