Balancing Customer Service & Profitability

Figured I’d write this after the recent kerfuffle with regard to our price lists.  For those who don’t know, while updating our pricing to reflect the new exchange rate; we accidentally priced a number of products significantly lower than our normal.  This was caught out by a few of our customers who then went out and made orders on these products.

Once we realised what the issue was, we cancelled those orders.  In general, we don’t honour mis-priced items and there are no legal obligations to do so.

A Fair Deal

The other side of the argument of course is that we ‘owed’ it to these customers to honour the mis-priced items.  However, I do not see it that way.  We run a business and with that business, we have decided on a pricing markup that we feel is fair.   That markup is simple – 150% of our Cost of Goods for new items we get from distributors (used products are marked up differently due to the different costs associated with them).  It’s one that allows us to run the business and keep it running while giving customers a good deal.

In this case, the products didn’t meet that margin and we managed to catch the error before the shipments went out to the chagrin of some customers (note, most were pretty understanding and excepting of this).   In other cases, keeping to this rule has benefited customers – for example, we refunded over 10 customers the difference between the old, over-priced amount for the Eclipse Ship Pack One and the new price.  We could have kept the funds and only refunded customers who complained / caught the change; but we felt it was fair to refund all of them.

Better Customer Service

At the end of the day, we can only do so much – we are a small company and a few hundred dollars loss is not an insignificant amount of money.  We try to provide good customer service, with good information and a fair sharing of the cost when mistakes are made.  We do our best to provide for the community as a whole – from our videos to donations to various community events, but all of those have costs.  Good customer service means providing fair service – it doesn’t mean taking losses where no one has been ‘hurt’.

I understand however others have a different view, and that’s more than fair.  However, this is how we’ve decided to run the company.

3 thoughts on “Balancing Customer Service & Profitability”

  1. I understand your position. I just don’t understand your statement on pricing versus cost of goods. Was that a typo?

    You cant have intended to write that you set your pricing based upon 150% of the wholesale costs? Wouldn’t that take you to far out of competition with other retailers like board game bliss?

    No offense is intended, I just thought you might have made a typo.

  2. Well said. Customers that are trying to cheat a business and weasel out products for loss making prices are not customers worth bothering with. I’d rather tell them to get stuffed and focus on continuing to provide excellent service to those that support the business.

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