Cost of Goods Sold: More Questions From Our Listeners
(Listen on Apple or Spotify. Full transcript below.)
You asked, Sarah is answering! We love these listener Q&A episodes, and today's cost of goods sold questions are absolute gold.
First up: When Google gives you two different definitions for the same term, which one should you trust?
Sarah breaks it down and explains gross profit margin vs. net profit margin and which should be your starting point for healthy food business cash flow.
Then, we hear from a food founder who thinks they're "double charging" themselves for labor.
Spoiler alert – they're not, but Sarah's explanation about theoretical COGS versus actual P&L numbers will probably change how you think about your own spreadsheets.
The episode wraps with insights from a recent live Q&A where tiered pricing sparked a fascinating conversation among members.
One founder wants to simplify their pricing structure due to rising & fluctuating costs, while another realized tiered pricing may be a benefit. Hear Sarah’s recommendation on how they should determine their best pricing strategies.
Keep those questions coming – we read every single email! You can reach us at hello@thegoodfoodcfo.com
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Episode Timeline
00:00 Welcome to Season 15: Embracing Change
03:20 Listener Questions: Insights from the Community
10:14 Understanding Profit Margins: A Deep Dive
17:13 Labor Costs in Cost of Goods Sold: Navigating Complexities
29:17 Tiered Pricing: Strategies for Success
Full Episode Transcript
You're listening to the Good Food CFO podcast. I'm your host, Sara Delevan, and with us as always is our producer, Chelsea Stier. Hey, Chelsea.
Hey Sarah, welcome to season 5!
my goodness. Yes, a brand new season is starting today. We're heading into summer and we're going to be doing things a little bit differently, aren't we,
Yeah. As you said, we're heading into summer and that is always a really busy time for us. There's a couple of summer birthdays on the team looking at you and me specifically. And as with most people, summer is also the time of vacations and enjoying fun in the sun. And in the past, summers have always felt really hectic around here, I think because we try to fit it all in and have fun.
Yeah, it's difficult when your team is like someone's gone for two weeks and then someone else has gone for two weeks. We believe in vacation, right, and taking time for yourself. So when you're trying to fit, you know, a full month's worth of work into two weeks, it can get difficult.
Yeah, definitely. you know, after last summer, I think we were feeling that pressure, right, that that hecticness. And then we had a beautiful realization.
An epiphany, if you will. Yeah. BABOYOT. Yes. Yes. Yeah. mean, building a business on your own terms is something that we talk about endlessly here and we have no plans on stopping. And when we looked at our schedules and what we wanted our summers to be like, and also what the summers are like for our audience, right? People are traveling. Listenership tends to dip a little bit when people are with their families. So much of our community
has kids in their life, whether it's their own or others that they spend time with in the summer. And it just seemed to make sense to slow down a little bit. Not only that though, but Chelsea, I'm gonna also tease as I've teased on social media that we have some big projects going on this summer. We have pulled back on office hours for the summer months to devote some time to this big project. We're gonna be working on this big project.
while taking some summer vacations and stuff. So it's a very busy time and we wanna do it all really well. And so what does that look like for the podcast specifically as we head into summer?
Well, Sarah, things are not going to look too different, especially this month in June. We will still have brand new episodes weekly, but then starting in July, we are going to move to a bi-weekly schedule for the rest of the summer. So that means that we'll have new episodes every other week until September. And then that's when we'll return to our weekly schedule towards the end of the season.
Yeah. And as I kind of just tease, we've got some other things happening. We're going to fill you in on that all along the way. So keep an eye out for updates probably around the 1st of July on some of the things that we're working on. There will be no shortage of content and meaty episodes, but yeah, we will space them out a little bit over those summer months.
Yeah. Okay, Sarah. So kicking off this episode, the first episode of season 15, you are going to be answering some listener questions. And I want to start off just by shouting out our listeners, our audience, first of all, because they have been sending some amazing questions to our inbox. So many, in fact, that this will not be the only listener question episode that we're doing this season. We have a couple lined up for.
everyone out there listening. And we're going to share also in this episode some insights that came out of our most recent BABOYOT member event where we did a Q &A as well, and kind of talk about what I thought was a really interesting conversation between two different founders that resulted in some really interesting insights as well.
Yeah. Yeah. I just quickly want to echo how fun it is to get listener questions to the inbox. We actually have a full episode coming up on like one very specific topic because we got multiple emails about the same thing. And so that just makes it super fun to go, okay, we're getting kind of multiple questions on a single topic. We can really dive into this, answer these questions and create a full episode. So I just want to remind everybody if
you hear an episode and it creates a question in your mind or you want to dig deeper into a topic that we are covering on the podcast, send an email. It's hello@thegoodfoodcfo.com. We literally read every single email. And while you might not get a response with the answer because that's literally impossible to email everybody back, we do read everything and we will bring them to the podcast in sort of a…
rapid fire Q &A or like, you know, a multiple, you know, questions per episode kind of thing like we're going to do today or we'll create a full episode to answer your questions. just absolutely love it so much.
It is a lot of fun. And talking about that Q &A that we did with BABOYOT members as well, that's part of this episode, I want to take a moment and thank our recent BABOYOT member, Catt Fields-White from Farmers Market Pros. Farmers Market Pros provides online education, an active community, a weekly podcast, and an annual conference to support food makers.
maximizing their margins by selling direct to consumers at community events. When you visit www.farmersmarketpros.com, you can binge over 300 episodes of Tent Talk, their farmers market podcast, and you can join their online community where you can take advantage of online classes and live streamed webinars.
Farmers Market Pros can help increase your sales and margins and reduce your stress while expanding your food business. Again, if you wanna learn more, please visit www.farmersmarketpros.com.
been on that podcast at least once, possibly twice, and love attending the annual conference as a presenter. I plan to be there in 2026. So thank you, Catt, and the entire Farmers Market Pros team for your support of the Good Food CFO.
Yeah, absolutely. So Sarah, as I mentioned before, today you are answering some listener questions on the podcast.
Yeah, I'll tease the questions we're going to be answering in the main episode. The first is around profit margin calculation. So we got an email in our inbox that asked for some clarification around how to do a profit margin calculation. It seems the founder maybe Googled it and got two answers and they wanted some insights from me on which was the right one to use. So we're going to dive into that. And then a somewhat complex question
about labor costs in a Cost of Goods Sold calculation for a founder-operated business? I absolutely love this question. think a lot of founders listening are going to be able to go, yeah, that's my situation too, and I'm glad to have clarification on this. And then as you mentioned, we're sharing a conversation, like a recap of a conversation from our member Q &A about strategic considerations around having tiered pricing or not. And as you already teased, like,
one member was sort of going in one direction for their business and after listening into the conversation, another founder was going to go in the complete opposite direction. So I love this kind of conversation and the reason we brought it to this episode was to reinforce this idea that every business is unique, right? And what might work for someone might not work for another and vice versa. So love that you, brought that conversation to today's episode.
Yeah, was fun to recap and kind of like rethink through, how was the question posed and how did you answer it? I thought that in itself was fun. So yeah, I know that you love answering these questions, Sarah, here on the podcast, as you've already said, and I'll just call out one more time. If you're listening and you have a question that you want answered, please send us your email. Send it to hello@thegoodfoodcfo.com.
And you might hear your question on this podcast one day. All right. Sarah, what do you say we go ahead and jump in? Let's do it. Hey there.
It's Sarah. If you're enjoying the podcast, I want to invite you to become a BABOYOT member. It stands for building a business on your own terms and your membership directly supports the continued production of this podcast and helps us reach our goal of supporting 1 million food founders. As a member, you'll get access to our live coaching events, have your brand featured right here on the podcast, be the first to test our new tools.
and receive a 10 % discount on all of our tools and services when you choose an annual plan. Join fellow successful founders at the goodfoodcfo.com slash BABOYOT. That's spelled B-A-B-O-Y-O-T. Together, we're changing the way that food business is done. Now, back to the show.
Okay, so Sarah, as I mentioned at the top of the episode, you are going to be answering some questions that we got from listeners in our inbox today. And this, like these couple of questions that we got for today's episode are all related to cost of goods sold. And I know that this is a very hot topic here on the podcast. We've talked about cost of goods sold many times. so I think I'll jump right in and we can get straight to it. Okay. So our first question.
Sure, let's do it.
It seems like a pretty simple one. The question is, what do you recommend we use to calculate profit margin? And then they gave us some examples here. They say profit margin is often calculated as net income divided by the company's total revenues. And then their second definition, profit margin, subtracting the cost of goods sold from total revenue and dividing it.
by total revenue. from what I'm reading here, this seems like definitions, right, that maybe were Googled or something by this person. And I think it's really interesting to point out because as you've mentioned, like as we've talked about this offline, that, you know, when you have a question like this and you do Google, you don't always get the nuance involved in the answer or like you can be led astray very easily.
So I'm glad that they kind of included that in the question.
Yeah, Chelsea, I think that's so great to point out because as you mentioned, this person is given two definitions for the same term, but they're very different. And so the nuance is missing, right? And my response here is that this is an excellent question because if you're wanting to figure out what your profit margin is, you want to know what it is you're calculating the profit margin for. In other words, is it for your business as a whole?
Is it for your products? You know what mean? Is it your net profit margin or is it your gross profit margin? There are so many terms in finance that sound very similar but mean very, very different things. Here's what I have to say to this founder and anybody else who has a similar question. First is that the two options given in the email are calculating two different types of profit margin.
The first one, which I will read the definition that they gave again, the first one says profit margin is often calculated as net income divided by the company's total revenues. That is the net margin, right? It's looking at the total profitability of the company as a whole.
The second definition of profit margin is subtracting the cost of goods sold from total revenue and then dividing it by total revenue. So that is actually looking at the gross profit margin for the business. Now, I'm going to go a little bit deeper here and talk about where you find these two different profit margins on your P &L. So the first one, that net profit margin or that
is going to be at the bottom of the P &L, right? Where you're looking at for my business, for the month or for the year, what is my profit or my losses? And then what is that as a percentage of my total revenue? So that's the very bottom of your P &L. The second definition, which is looking at the gross profit margin, is going to be directly underneath the COGS section on the P &L. And this is where I recommend
focusing on first, right? So if you're someone who's like, I'm just trying to understand profit margin, I'm trying to understand what it means for my business, I'm trying to understand how my business is performing, you want to look at the gross profit margin metric first. Because if that is not healthy, i.e., you you're not generating enough gross profit dollars to cover your operating expenses or your gross profit margin percentages below 50%, right? Then it's harder to achieve
overall company profitability. In other words, you have to have a healthy gross profit margin to improve your chances of creating a company profit or a positive net profit margin for your business.
Yeah, this is, I know I've talked about this a million times before. Every time we talk about a P &L, I'm like, yes, let me talk about my P &L, you know, with Starbucks. And this reminds me of, know, I always would talk about like that total revenue is that 100%. And then that gross profit, you know, what's your goal there? And then breaking it down to what we called controllable contribution. So that's really like operating expenses. And then the uncontrollables at the bottom.
would then filter down to that total, like what you're calling that net profit margin. We called it total contribution because we're contributing to a corporate entity. But it is often how we would look at our P &L as like that gross profit margin. If you're not hitting that goal, there's no way you're going to hit your total contribution at the end. There's no way you're going to get to those.
other, you know, those other goals. And so, yeah, I think that's, that's a really important thing to look at and think about every month.
Yeah. And as we've said many, many times here, the gross profit margin for a business is also an indicator of cash flow, right? And how likely a business is going to need to take on debt to continue or to grow the business. so that's what we dive into a lot here on the podcast. If you're new to checking out the show, go back to episode 100. Go back to the Rethinking Cash Flow episode, which is even earlier in the podcast, and really dig into what
does this gross profit margin mean? How does it affect cash flow? Why is it so important? Once you've got that dialed in, once you understand how do I, for lack of better wording, maximize my gross profit margin, once you're there, then you can go about, for example, growing your revenue and feeling confident that that is going to have a direct impact on that bottom line profit number, that net income.
or net profit margin for your business. So sort of like one thing at a time. We always talk about making sure the inside of your business is working really well and working for you so that when you go to grow, you're having the right financial impacts on your business as opposed to the opposite because we know that growth can often cost a lot of money if the inside of your business isn't working right. And that gross profit margin is a key indicator of that.
Once again, thank you so much to the listener who sent in this question. I think it's a great question. I think it's one that perhaps several listeners have had if they've gone to the Google and said, how do I calculate that gross profit margin again? Or how do I calculate that profit margin? Because there is a little bit of nuance. You got to have all the right words in order to do a Google search on that properly.
All right, Sarah, well, our next question is a bit meatier, so a bit longer here. So bear with me as I read through this, but I think you're going to have some really interesting things to say about it. Okay. Okay. This is from the listener directly. I'm quoting them. Here's my question. I've been using a fairly decent COGS calculator since day one to calculate Cost of Goods Sold and margins across channels. Step one, we like that.
In the sheet, there is a place to enter hourly rate for production humans, and I've always diligently entered numbers for a cook, a packager, and a shipper. Okay. The thing is, we are six years in and still have not hired staff for these positions. Now, I do believe that my time is worth something.
and my partner and I both draw a salary from the business on a monthly basis. These salaries that we're drawing live under expenses on the P &L statement, not Cost of Goods Sold. So in my mind, I feel like I'm double charging myself for the labor that I've invested in production of my product.
Now I recognize that at some future point I will most assuredly have someone else doing the heavy lifting on the production side. But until then, and here it comes, can I zero out those hourly rates in my cog sheet? It literally will drop my cost per unit by around $1 and quite honestly, it feels like it is giving me a
you
better idea of my real world financial picture.
Okay. I love this question. We have a couple of things to unpack here. So you were right that it is a little bit meatier and I'm very excited about it. number one, I want to point out that this listener is utilizing a COGS spreadsheet. Okay. So in the COGS spreadsheet, what we're doing is we're doing a calculation of the cost of goods sold for a product.
Okay? So I'm going to call this product level cost of goods sold. I'm like literally making notes so that I can follow my own reasoning and process here. So what they have is product level cogs. And then on their P &L, right, they're saying they have the cost of their labor and potentially their partner's labor listed as an expense because they are taking money from the business.
They use the word draw here, which is a very important word in finance. But they are saying it lives under expenses, but I'm going to make a point of clarification here. Now, if you are a founder and you are on payroll, your pay is going to show up on your P &L under expenses. It's usually like owner salary or something like that, separate it out.
If you are not on payroll and you are taking draws from your business, that does not show up on the P &O. That is something that shows up on the balance sheet and I'm not going to go into any more details on that. But just as a point of clarification here for listeners, I think it's a good teaching point that
Those are two different things. When we use the word draw, technically we mean it's coming out of the profits. And so we're not actually seeing it on the P &L. When you're paid on payroll, you are indeed seeing your salary or however you're paying yourself as an owner's pay in the expense section of your P &L. The other thing I want to say about the P &L is that what we have on the P &L is the actual cogs.
versus what we have on the costing spreadsheet, which is what I have sometimes referred to as the theoretical cogs.
Yeah, okay.
The two are almost like 99.9 % of the time not the same for a variety of reasons, right? So let's talk about them. Number one is you have a product, you're estimating the labor cost, right? You're estimating as best you can the packaging costs. You're estimating as best you can the cost to put the shipment together. Oftentimes there is cleanup.
set up, different things that are factored into the day, and those can change and they can look different depending on what you're producing in a particular day. So the labor hours never match up exactly. Another thing that might not match up exactly is how many units of product you are creating in a day. In order to hit the exact metrics,
that you have on your costing spreadsheet on your P &L, you have to be hitting like the exact unit production in an eight-hour day, for example, every single day, right? And there's got to be that level of consistency there. The COGS spreadsheet is meant to be a guideline. It's meant to help us with our strategy. It's meant to help us say, okay, this is the cost of all the physical inputs. This is the cost of all the, as they say, human inputs.
And when I add all of those up, the cost of my product is I'm going to say $4.25. Then you use that number to create your pricing strategy, to understand your gross profit margin on that product, right? And to make decisions. That 4.25 is not what's hitting the Cost of Goods Sold section of your P &L every time you sell that product.
unless you have set up your QuickBooks to work that way. If you have, then yes, you can remove the human labor time that is also being taken from the business via your payroll. I'm thinking highly unlikely that that is what's happening. What I think is happening is the actual cost for production labor, well, there are none, so that's not hitting cost of goods sold.
the actual cost for ingredients and the actual cost for packaging are hitting cost of goods sold. There's no labor cost actually hitting the Cost of Goods Sold section of the P &L. There is no double counting of the labor because it truly only is showing up in the expense category on that P &L sheet. Does that make sense, Chelsea? Am I leaving any of gaps or any areas where you could use a little extra?
No, I think what I'm hearing you say is that the double charge is not possible or is not happening on the P &L because those expenses are not built into the P &L. And so maybe the imagination or the understanding of the double charge is more so in like the planning.
Yes. Okay. And that's a really great way to bring it up. So I was thinking about the COGS spreadsheet, those theoretical COGS, using them specifically for understanding your margins, setting your pricing, etc. If this founder is using that, I'm going to say the theoretical COGS, as well as what they're paying themselves and their partner and they're building out a financial forecast,
then they would be double counting the labor, right? So their cash flow projection or their profitability projection would be off because there would be a double counting in the projection of that labor, right? So going back to their question where they say, can I zero out those hourly rates in my Cost of Goods Sold sheet? I want to say no, because I want you to see the full cost including labor
Mm-hmm.
in order to verify what your margins are in each of your channels to understand what the total cost of goods sold for your products are, et cetera. But we'll add to that, if you're creating a forecast, if you're developing a cashflow projection, then do exclude the labor that you had included in the theoretical Cost of Goods Sold from that projection so that it's not
double counted. Okay. And here's the other thing I'm going to say on the topic of the forecasting because they also mentioned in their question that they do plan on or assume that in the future they will hire people. So when that day comes, we want that labor added back into our cashflow projection and included in our forecast, right? Because then the assumption is they will continue paying themselves and they will
Okay.
have the additional cost of another individual doing the labor for the production, the packaging, and the shipping. So it's really good information to have. I guess it's sort of one of those things where it depends on how you're using that information for your business in terms of whether you remove that labor or not. And so hopefully this provides some clarity.
Yeah.
Yeah. And I want to go back again to when you're talking about leaving that information in the cog sheet, like for those theoretical cost of goods sold, so that you can make sure… I guess what I'm thinking is like, if they do it this way, then that does ensure that if they do hire someone eventually, that those margins will still be what they need to be and that they are not having to raise the price of the product in the future.
because it's already set to what it needs to be to maintain the proper margin.
Yeah, that's a great point too, right? Again, we have those theoretical COGS. We utilize Cost of Goods Sold calculations spreadsheets to understand what is the true cost as we see it to produce our products that we can make the strategic pricing and channel growth decisions, right? So yeah, if you take it out of there, you're then missing a
very important piece of information to set the right prices. So then if you suddenly at some later point add in a different person's labor, suddenly your margins are going to change potentially dramatically. And so, yeah, and I think one of the key things I want people to hear is you want to have that Cost of Goods Sold spreadsheet. You want to understand what I'm calling theoretical Cost of Goods Sold because again, they're not going to translate exactly 100%, you know,
like to your P &L, but you need that theoretical number. You need to understand it. You need to understand how it might change over time if your labor costs go up, if your ingredient costs go up. You need to keep an eye on that so you can make sure that your margins are still in good place. So as you make decisions to potentially grow in a new channel, like you can go back to that and utilize it in some of your decision making. But then you also have your P &L, which is showing you
how real money was spent over time, right? And they're just two different things and they both provide value.
They both matter. And Sarah, I actually want to wrap up this episode by sort of an amalgamation of questions that we had at our recent live Q &A that we did with our BABOYOT members that I thought was a really interesting conversation between not just, you you and the...
They do.
the group, but actually the founders themselves. so I'd love to, I'm going to start with the first question, I think, and then we can go from there. Okay. And both of these questions really is around tiered pricing. And so our first founder, I'm going to just set this up for you, basically has like three different categories of her product, right? And within each of those categories, there are two to three products.
that have different pricing levels or tiered pricing within each of those categories. And her question was, I think, really more around the changing costs that they're facing right now and how the effect that that's having on that tiered pricing and whether or not they should continue to have tiered pricing.
Yeah. So it's a farm direct product. I want to point that out because I think a lot of people, you know, in a situation where you don't have a lot of control over your supply, for example, you're working with multiple different farmers and there's lots of products, right, in the good food space that are like that, you may have, you know, one source for a really great ingredient one month or one quarter and then it's still the same type of ingredient and it's also a really great quality but it's coming from somewhere else and the cost can be
We're also living in the time of changing tariffs and all sorts of things if you're importing any of these products. I recall the founder saying things are changing and what was my lowest tiered product, now that cost is not only going up but it's fluctuating from time to time. What do I do? Do I continue to
to offer tiered pricing. How do I do this in a way that makes sense? And again, paraphrasing a little bit for the sake of time here. And I remember having a couple of questions for her, which I generally do when someone asks me a question, I'm that person who comes back with a couple other questions. And I said, does tiered pricing make the most sense for your customer? Because if it's presenting a challenge to her in her business,
We know this. That's one piece of information. I was then curious about how the customers interacted with it, how they felt about it. And my big question was, is there a tier, for example, that people purchase most often? So if one of the categories has a low, medium, and high price point, are people just kind of landing on the medium price point? Just, you know what I mean?
most often? You know what I mean? Or are people purchasing across all three price tiers? What kind of customer data do we have around that? My homework, if you will, for her was to go look at the data. What are people buying? Is there a price point or a tier level that people are tending to purchase more often than others?
Is there equal sales across all three tiers? To start to gather those insights of like, do I really need three tiers or can I make this pricing structure easier for me and what's currently happening in the world as well as make it easier for my customer? Just like founders, think consumers can get overwhelmed. If you're not an expert in a certain area and how to purchase certain things, you can go, okay,
what's the difference in these three price tiers? It's like wine sort of, right? If you're like, does the red wine that costs more money really taste better or will I like the low cost wine or do I just go middle of the road? Because that's like the safest option, right? Just kind of as an example. And so I thought that going to the data and seeing what she could learn was the number one thing that she should do next before making any other decisions around it.
and then start to consider what might the pricing look like if we changed it? Would it be all one price? Would we go from maybe three tiers to two tiers? You know what mean? What could the options be and how does that sort of relate to the cost of goods sold and how they're changing? We don't want to make our lives harder as founders and oftentimes we do, myself included, right? Because we're trying to serve people better but
if we're making it more complicated for ourselves and if at the end of the day everyone's buying the middle of the road priced product, let's save everybody a little bit of time. You know what I mean? And get your margins where they need to be. So that was the advice there. And then I remember another founder sort of chiming in and I'll let you share their point of view, but it was really interesting from that conversation what the next founder said.
Yeah. That founder actually shared that they spoke up and they were like, well, now wait a second. I think that maybe I should be doing tiered pricing after listening to your answer. Just to tee up how their product works, they have, I'll say maybe like four or five products. Within those four or five products, they'll have two that have two ingredients.
They'll have two more that have four ingredients maybe, and then a fifth one that has six ingredients. For them, they kind of saw this light bulb go off of, if I tier my pricing based off of what's actually inside this product, maybe that will better serve my customers.
Yeah. I'm going to give another example, like a comparative to maybe help illustrate this. Let's say you've got – Okay, I'm thinking of a rice pouch. Let's say you have just a rice pouch, just rice. Then you have a rice pouch, a good food version of a rice pouch that has veggies added to it. Then you have another one that has all the protein and stuff inside, for example. Those are
three different types of products, right? Rice only, veggie and rice, and then let's call it like full meal. And that's not exactly what her product line is, but I think it's like a good kind of example. And she's charging essentially the same price for all three. And as you said, kind of wondering like, wait a second, my cost of goods sold are distinctly different. another way you can look at it is like the value I'm providing is distinctly different across.
Hmm.
the product line, but I'm charging the same price for every single product. And again, I think we go to the customer, you know what I mean? And have some conversations with them, right? Because there was also within that conversation, one of like, people want more from me. They want more options, right? So she's really in a stage of...
learning about her customer, understanding what they want. They want more from her, which is very exciting, but it's like, what does that more look like and how does she make that work in a way that makes sense for her and her business? what value, I think the big question is what value would that tiered pricing offer to the customer? Like one thing that could happen hypothetically is that more people start buying the rice and veg
option versus the full meal option at the lower price point. So now she's got a lower margin potential on that product. And so it's like if people are happily buying that product at the current price point, what is the value or the benefit of reducing the margin essentially?
Mmm.
There's a lot of interesting things here, Chelsea. One is that we're having a conversation where one founder, we're kind of leaning toward maybe that tiered pricing is a little more complicated than it needs to be for you and your founder. And then on the other side, it's maybe there's benefit to tiered pricing for these other customers. But then the question I have is, what's the benefit to you as a business? Yeah. Is it going to increase sales? Does that help you if the sales increase but the margins go down? So really, like
What's coming to mind now is these are very holistic questions where you can't just make a decision in a vacuum without thinking about how does this impact my customer and how does this impact my business? Like so many things in food, it's going to be different for each business, for each founder, for each set of customers. These products are so very different from one another. That also makes a big difference too.
I don't know if you were hoping that I would really give some clarity on kind of where we landed with those founders, but I think it was more from thinking about it today and I think thinking back to that day, I think it was really redirecting them to this is, a financial question, but we have to involve our customers in this and we need to understand them, their wants, their needs, their desires.
then also bring that information back to the business and say, this make sense for us? I'm now thinking about The Mom Test, which is the book that is our summer book club selection. It's very much related to this topic, right? It's like creating a product that truly solves a problem, right? That your customer really wants and that your customer is
willing to pay for and knowing them is of the utmost importance in building a business. Because at the end of the day, if you don't know them, you can set your product price at whatever you want. You can get the margins that we recommend of 51 % or higher.
Yeah.
if you aren't able to sell your product, you don't have a business. Now I'm thinking about the very, very beginning of the Good Food CFO podcast where we sat down with Ali Ball and Katie Mlezava and we talked about the three pillars and really how important your finance, your brand strategy, and your sales strategy, how important those all are and that they all need to be really dialed in as well as possible to create a successful brand.
I might have opened more questions than I did provide answers with that, but I love that you went there because it really is food for thought. There's a lot of components you have to get right in building a profitable food business.
Yeah. And I'm glad that we were able to, you know, not just answer some questions that we had here today from our inbox, but have a bigger conversation that carried over from getting together with our members, you know? And I think that it is a very good representation of what that conversation was like.
Yeah, that's true. Well, thank you to everybody who sent their questions to our inbox. We really do read every single email and we strive to answer every question that we get in our inbox. Sometimes it takes a bit of time to develop a full episode and sometimes we can bring them to episodes just like this. So if you like these episodes, we encourage you to email us. Send us your questions. Chelsea, what is that email address?
Yeah, that is going to be hello at the goodfoodscfo.com. And as you said, we read every single email that comes into that inbox. So yes, please, please, please send us your questions, your thoughts, your comments. We love to read it all. Yeah. We love it.
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