I have learned great lessons from my father.
He always tells me his experiences and I always try to get meaning from the story.
Here, I am sharing one of the stories that will definitely help you in scaling up your sales.
It was the winter of 1995 when my father went to Patna for his PhD Thesis.
He stopped at a tea stall.
In India, we just stop by to drink tea and go.
He asked the cost of one cup of tea.
The seller said “5 Rupees” (Rupee is Indian Currency).
In an unknown place, you need to ask the cost before ordering a cup of tea, else you will end up paying more than what you expect.
So, he moved on.
In 1995, 5 rupees for a cup of tea was a bit expensive.
He found another tea stall nearby and a very nice place to sit.
He asked the cost of one cup of tea and the person at the counter said, “2 Rupees Sir”.
My father saw a lot of students, teachers, and office goers sitting, chatting while taking a sip of very economical tea.
My father always likes to talk with shop owners.
He casually asked, “How do you manage to sell tea at 2 rupees while your competitors are selling at 5 rupees?”
He said, “Sir, I sell 2000 cups of tea every day and because of their price they sell around 300-400”
“The total cost of creating one cup of tea is 0.50 rupees. So, after selling 2000 cups, I get 4000 rupees income every day and they get 2000 rupees income”, he added.
“So my profit after deducting all cost is 4000- (0.5*2000)=3000 rupees a day and their 2000-(0.5*400)=1800 rupees per day”, he said happily.
We use pure cow milk to make tea. So, customers love our tea and coffee and they return to our shop.
In this way, we earn 3000*30=90000 rupees per month and they get 1800*30=54000 rupees.
I understood the lesson from the story.
Reduce your profit margin and increase the quality of the product.
Eventually your product will have less selling price than your competitor.
And, then you will have more sales.
The more sales you will have, the more profit you will get.
If you will keep your profit margin high, you will have products with a higher selling price.
And, that will lead to less customers, and less sales.
So, Keep your profit margin low and scale up your business.
See you with another story.