You have quite a dilemma on your hands. While I don't have any quick answers, you might be interested in this article, written by our business experts at Touchpoint: Doing It Right Every Time: How to embed ethical practices into your small business
Hopefully other members of our community will jump in with some advice and tips for what worked for them in making sure that ethical practice in their small businesses are achieved and has helped them excel.
Please keep us informed!
KSP- this is a very interesting post. I'm not giving you advice here, because the ultimate decision is yours. But, here are a few thoughts you should consider.
At some point in this country, the words "profit" and "markup" became dirty words. They are not. The country was built on companies selling products and services while turning a profit. The right markup is honestly what the market will bear. Here's an example to look at next time you walk in your grocery store. Let's say your looking to buy a dozen eggs, and the store charges $1.29. Because eggs are a common commodity, the stores markup is probably only 3-4%. A can of chicken noodle soup may have a markup of 6%. But, let's say you need a can opener for that can of soup. The nice looking red can opener is $12.99. The reality is that the store chain probably bought that can opener in mass for $1.26 each. So, the markup on that can opener is more than 1,000%! Is the store being unethical for this high markup on the can opener? My answer is "no", because that is one of the ways they can make an overall profit, pay their employees and stay in business.
The reality is that markup in cosmetics can be very high. If the market will bear an MSRP pricing close to 300% markup, then I would say to go for it. If the price for your product is too high, then people won't buy it and your MSRP will have to come down. If you product is truly successful, competitors will quickly pop up and undercut your markup. Again, your MSRP will have to come down.
Again, if you can start with a 300% markup, then I say "Make hay while the sun shines". Ultimately, the marketplace will determine what your true markup and profit ends up being.
Just food for thought.
This is a tough challenge, and kudos to you for wanting to offer your customers the most reasonable prices possible. You might find some useful advice in these two articles written by our experts:
You also may want to consider other ethical business practices, such as putting a percentage of your profits toward a charity or sponsoring events that benefit the local community. There are many ways to conduct your business in an ethical fashion that may not involve pricing yourself under the market. People may even pay a little more for your products and services if they know that some of the money they pay you goes toward improving someone else's situation somewhere.
I am writing this post in hopes I can find answers for my business. I am new to writing anything personal about my life or in fact even talking about my life to anyone.
I worked in the cosmetic industry for many, many years and was approached with an opportunity to work with one of the biggest cosmetic research and development companies in the world. I became the US distributor for this line and found myself hitting the same roadblock with every big opportunity that came my way- pricing.
With every opportunity to make it “big” in this industry required me to raise my MSRP pricing close to 300% which they said would be a “fair” margin leaving me to believe this is exactly why “the rich get richer, and the poor get poorer” My next question is: Can I even make it in this industry living with morals and conviction? I have wrestled with this question every waking moment for the past 7 months and I have accepted that my answer is no. With the excuse from these large agencies being “your product is worth more that 400 dollars” but to me, worth is subjective. What is a fact is that my prices don’t have to be that much. I am torn everyday looking at my family struggle day in and day out with no income because I am not able to look passed my conviction and turning away multi-million dollar deals because I am not ready to commit myself to a life of deceit. Please understand I am not here to gloat that I am living an honest life because my conviction truly has become my enemy. If you find it in your heart to give advice to a lost soul, please do. I am desperate for answers even if it means having to hear that I am naïve to the realities of business. If this is true, I am willing to give up everything and move onto the next chapter of my life because I truly believe that the rich do not deserve to get richer.
If you can give me guidance or advice on what my next step should be, please comment below.