How much profit is too much?

There is no line, and anyone who gives you one is substituting their judgement for yours. The examinable things are the price, the wages, and whether the work was worth what was charged.

Should I charge less to be fair to customers?

Fair means the price reflects the value and the cost. Charging below that is not generosity, it is a subsidy you fund by paying people less or working yourself into the ground.

Is it wrong to want the business to grow?

No. It is worth being clear what the growth is for, because "bigger" is not automatically better and a larger business you hate running is not a win.

← Answers

Is it wrong to make a large profit?

Profit made by doing good work at an honest price is not something to apologise for — it is what lets you pay people properly, survive a bad quarter and keep your word when keeping it costs something. The question worth asking is not how much you made but how you made it, and what it cost the people involved.

How it was made is the actual question

The same profit figure can come from work priced fairly and delivered well, or from underpaying people and cutting corners nobody checks. The number does not distinguish between them. What you did to get it does.

Underpricing is not humility

Owners who feel uneasy about profit often solve it by charging too little, and then discover they cannot pay properly, cannot invest, and cannot absorb a bad month. A business that is fragile because its owner was uncomfortable charging fairly serves nobody — least of all the people depending on it for a wage.

What profit is for

It is not only extraction. It is the buffer that means you do not have to take a bad job in a slow month, the thing that pays for training, the reason you can keep someone on through a quiet winter. Thin margins remove all of those choices, and the pressure lands on the people with the least say.

Where it does go wrong

When the number becomes the only thing measured. When a customer who will never check the invoice gets treated differently. When "we can't afford it" is said about wages and not about anything else. Those are worth watching, and none of them is fixed by making less money.

Also asked

How much profit is too much?: There is no line, and anyone who gives you one is substituting their judgement for yours. The examinable things are the price, the wages, and whether the work was worth what was charged.
Should I charge less to be fair to customers?: Fair means the price reflects the value and the cost. Charging below that is not generosity, it is a subsidy you fund by paying people less or working yourself into the ground.
Is it wrong to want the business to grow?: No. It is worth being clear what the growth is for, because "bigger" is not automatically better and a larger business you hate running is not a win.

Written for your trade

This is the kind of thing Solomon works through with owners using their own numbers. See how it works →