February 25, 2025

Price Justifies Costs

Here’s a quote I love from pricing guru Ron Baker:

“Price justifies costs incurred to produce something of value customers are willing to pay for.” —Ron Baker

I saw a spoof video that accidentally demonstrates this concept.

It shows three guys designing a cooler that they planned to sell for $300, even though most coolers are $30.

The video was meant to make fun of YETI, but since YETI does, in fact, sell coolers for $300, I think the joke’s on the video creators ;-)

Anyways...

The YETI cooler example perfectly illustrates Ron Baker’s quote.

If you are confident that you can sell a cooler for $300, it justifies spending $150 to manufacture each one, even though all of your “competitors” can only spend $15 because they’re pricing them at $30.

Which would you rather be?

The premium brand making $150 per sale, or the commodity provider making only $15?

Yours,

—J

BackRandomNext