What is better: making a sale worth $5 or making one worth $5,000,000?
Got your answer?
If it’s $5 or $5,000,000 it’s wrong. The correct answer is:
It depends on how much it costs you to fulfill the sale.
If it costs you $.25 to fulfill the $5 purchase and $6,000,000 to fulfill the $5,000,000 purchase then you should snap up the small money and run from the million dollar “opportunity.”
Logically, we know this. It’s a “no duh” answer. That’s how profit works: revenue – COGS = gross margin.
However, in practice, we tend to be blind to the cost of opportunities and fixate on the upside.Continue reading