You may give out promotional products in the hopes of achieving the other core business. The problem with that is the margins on promotional products are usually lower, sometimes half of what you can get on custom gifts and awards. It’s not uncommon for most promotional products to yield a 25-35% gross profit margin. For example, if I pay 65 cents for a printed pen, I can only usually get a dollar or less. Custom gifts and awards ought to get 60-70% profit margin; something that costs a dollar to make can be sold for three dollars. Promotional products don’t demand a high-profit margin because there is no discernible difference from one item to another.
If you lead with giveaway items in hopes that you will build up your core business with a potential client, you could be disappointed because people may not be able to appreciate how much profit that you can command. It sets a dangerous pretense when you lead with promotional products instead of leading with your core product lines. Generally speaking, promotional products do not command the same gross margins that you ought to get from your core product lines.
—Your Personal Business Trainer
