How Much Does It Cost?

Posted by Jim Van on December 16, 2011 under entrepreneur, small business | 2 Comments to Read

It’s that time of year. As the holidays approach, retailers offer deals that make every shopping day feel like Black Friday. Deals, deals everywhere have made us, as consumers, more price sensitive.as ever. The cost of my first Sony Walkman was $199 somewhere around 1984. For my latest iPhone, which hold an entire library of nearly 2,000 songs, over 200 books, dozens of helpful online apps, radio, news, and so much more. The cost in 2011? $199. The same holds true for most tech gadgets, but the biggest impact has been on small business owners…

Overhead has always been a much larger issue for small business than for larger companies. When you’re talking revenues of <$1 million, a $500 monthly expense has a lot more impact than it does to, say, a company with, say $100 million in revenues. But add to that the pricing pressures wrought by retailers such as Wal-Mart, Dick’s, Costco, or Best Buy, and retailers and service firms alike are forced to lower prices all the time to remain competitive. Sometimes.

Here’s a single example of where small business wins out. Two years ago, we bought a new color laser printer for the office. It’s heavy duty, and lives up to all the use it gets. Sooner or later, it runs out of toner, however, We decided to do a little shopping around. Our local chain office supply store didn’t carry it, though their website did: 65 and delivered in two days. Ultimately, we selected a vendor who offered a guaranteed compatible cartridge for $24, including shipping, with delivery in 4-5 days. The cartridge arrived two days later, was installed, and worked fine for the next 2,000 or so pages. For all I know, the company that sold me the cartridge could’ve been some guy in his bathrobe, working out of his basement in a bad neighborhood. who cares? It worked and cost 1/3 the price of those offered at chain and big box stores. Since then, we’ve ordered from the same company on several occasions.

Larger companies can afford to mark up large ticket items, such as appliances, electronics and the like because they know that they’ll make high margins on the options and peripherals. And THAT’s an area where they, with their huge overheads, simply can’t compete with their smaller brethren.