I have a secret that I'm telling the world: I'm fascinated by house flippers. They are the folks who buy a home that's a little (or a lot) run down, fix it up, and resell it for a (substantial) profit.
I'm so fascinated by these hammer-swinging entrepreneurs that I could be considered an almost loyal viewer of the many house flipping shows on television. It's interesting to me to compare the professionals in the show Flip This House to the amateurs in Property Ladder.
The professionals are very careful, plan everything out, and price the product according to the market. Of the shows I've seen of Flip This House, the professionals always seem to earn an impressive profit.
On the other hand, the amateurs in Property Ladder take twice as long by doing the work themselves (to save money from hiring a sub-contractor), make poor choices in decorating, and price the house much too high. Then they end up sitting on the house for some time and paying the carrying costs. It makes for much more entertaining television.
It's an interesting lesson in one of the oldest vices of humankind: greed. In an effort to do things the cheapest way possible AND to get the highest resale dollar out of the home, they make poor decisions that end up costing them too much.
I'm fairly blatant on this blog and on MoreBusiness.com about not being the low cost provider (that is: competing on price by shaving your profit margin razor thin). But let me also suggest that being the high cost provider (by inflating your profit margin) — without the right strategy — may not be good for your business.