1 is greater than 0

1 is greater than 0. It’s such a simple business concept but so easy to forget.

If you are selling a good or service where there is plenty of supply, if you make a sale for greater than it costs, you are making a profit. It’s great to make a large profit but a small profit (1) is greater than no profit (0).

Hotels understand this concept which is why if you need a hotel room at the last minute, you can go to sites such as hotwire.com and get an incredible price at a four star hotel. While the hotel might want $225 per night for the room, it’s better for them to get $79 for that room rather than have it sit empty and make $0

A number of years ago, I was selling soccer equipment online. I was able to buy for the same price as any other dealer but was willing to sell for a lower price because I understood the simple concept that 1 was greater than 0. I wasn’t allowed to advertise how low I was selling for because the manufacturer felt that would devalue their product but the reality is they didn’t care how low I sold it for because they made their profit from selling to me at the wholesale cost. Other dealers didn’t like it because they wanted to maintain a certain profit margin but I was more interested in making a profit than a profit margin.

There are exceptions to this rule. A hotel room night works because if it’s not used, it’s lost forever. Food works because if it’s not used, it goes bad. On the other hand, a fine piece of Art can only be sold once so if you sell for a small profit, you lose the opportunity to sell for more later on. Same thing with real estate and time that is in demand.

Basically, this rule applies for items with high supply or those which expire.

Some people will never apply this rule because selling for a small profit will damage their ego however, it worked quite well for Sam Walton!

Have a great day!

Lawrence

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