Cap your take so the customer always feels the win
Costco has a written rule. Gross margin on branded goods is capped at 14%, Kirkland at 15%. Walmart runs around 24%. Target around 28%. Buyers cannot price an item above the cap without sign-off from HQ. When a vendor improves the product or cuts cost, the gain doesn't widen Costco's margin — it flows back into a lower shelf price. Sinegal once pointed out you could raise a bottle of ketchup from $1.00 to $1.03 and no customer would notice. Three percent on every item would add 50% to pre-tax income. The whole company exists to refuse that trade. The result is a shopping experience where every random item is priced honestly, and the customer can stop comparing.
