Dylan Vergara explains why Costco's $1.50 hotdog combo is a trap for small business owners. Costco uses it as a loss leader for a massive ecosystem, not a pricing model you can copy. Instead, raise your prices, invest in your team, and target better clients.
Every person that I know that owns a business that their selling point is they are the cheapest in the market, they're the most affordable, they don't last. They're pretty insufferable people, and they think they're doing the whole like Costco hot dog method combo, uh, but they're not Costco because Costco is worth billions and billions of dollars. If you're good at what you do, you should charge enough to turn a profit, invest back into yourself, invest back into your business and your people so you can serve your clients better. If we talk about the beloved Costco hot dog combo that price hasn't gone up in 20 years or whatever it is. That's a loss leader. Like, they intentionally lose money on that to get people in the door. Your entire business should not be a loss leader. It's a race to the bottom. You want to compete up here, upper part of the market, not down here. Your clients are going to be better. They're going to get better results. They're going to love you better. Referrals go further. You don't want to be competing with Chuck in a truck. You don't want to be competing with people cutting corners because there's always— I promise there's always someone who can do it worse for cheaper. You'll never win that race, and that's a pretty poor way to stay in business if that's what you want to do. Up your prices, charge more. Thank me later, thank yourself later. Your team will thank you, your customers will thank you. It's a win-win situation. Don't be the Costco hot dog combo.
