The Profit Hidden Behind: “How We've Always Done It"
- Oct 13
- 3 min read
By Todd Hagopian
Every industry operates on unwritten rules so fundamental that no one questions them. Appliances must be white. Refrigerators need water dispensers. Shopping carts are equipment purchases. Mid-tier products must be priced below premium ones. These aren't strategies; they're orthodoxies. The most profitable strategy in business is smashing sacred cows in boring businesses.
Consider the refrigeration pricing trap that nearly destroyed an entire product category. Manufacturers of side-by-side (SxS) refrigerators accepted that their models must be priced below the French door models. As French door prices dropped, SxS manufacturers cut prices to maintain this hierarchy. Soon, the entire SxS Industry was hemorrhaging hundreds of millions annually.
The orthodoxy seemed unbreakable until I asked my team: what if we're all wrong? When we raised prices 8%, competitors immediately followed. Then another increase, and another.
The entire industry had been trapped in a prisoner's dilemma—like poker players all bluffing with bad hands, afraid to fold first. The pricing hierarchy was entirely artificial. Customers who wanted side-by-side refrigerators valued the superior freezer space and extra capacity. The "rule" existed only because everyone believed it had to.
The water dispenser revelation proved equally transformative. Industry wisdom held SxS had to have water dispensers to get people to step up from the top-freezer models. But, French door had proven the opposite when they were outselling premium SxS without even having a dispenser in their low-end offerings. My team analyzed the big picture. Removing dispensers saved 15% in manufacturing costs while eliminating most warranty claims. The "essential" feature was actually a profit killer camouflaged by convention. We launched a opening price point model without a dispenser and our new model made more money at a more aggressive price point.
We found similar orthodoxies in the laundry division. For eighty years, washers were displayed in white because "that's what customers expected." When we started advertising, products in chrome, the industry was incredulous. Retailers don't advertise colored appliances. Customers won't pay premiums.
Every assumption was spectacularly wrong. Chrome achieved nearly 100% attachment rates (customers buying chrome washers purchased matching dryers) compared to 30-40% for white models. Since manufacturers lost money on washers but profited on dryers, this attachment rate transformation turned the business model from broken to brilliant. Major retailers began featuring chrome appliances in advertisements, something experts insisted would never happen.
The shopping cart transformation revealed how fundamentally wrong an industry can be about its purpose. When I took over a cart manufacturer, everyone believed we bent metal into interesting shapes and sold a cheap commodity product. But research revealed 87% of shoppers had abandoned shopping trips, without making a single purchase, due to damaged carts.
The orthodoxy-smashing insight: we weren't selling shopping carts, we were selling shopping completion. A broken cart wasn’t just a minor annoyance, it was a revenue vampire, draining dollars with every disgusted customer who took their money to a competitor. This reframing transformed a $75 capital expenditure into a six-figure revenue protection investment.
These examples share a pattern: most profitable innovations require no new technology, no major investment, just courage to question assumptions so basic they're never articulated. Every industry has similar orthodoxies, rules everyone follows but no one remembers creating.
The lesson isn't breaking rules randomly, but systematically questioning why things are done certain ways. What industry "laws" are actually habits? What "essential" features destroy value? What business are you really in?
The biggest opportunities aren't hidden in complex strategies or technological breakthroughs. They're hiding behind the phrase everyone in your industry mutters but never challenges: "That's how we've always done it."
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