More revenue isn’t the same thing as more margin

An industry survey making the rounds this month has a finding worth sitting with: among the
country's artisan and specialty cheesemakers, the ones with the highest gross revenue tend to post
the thinnest profit margins, not the fattest ones. Roughly four in five operations were profitable
in the most recent year measured. That's a solid number. It's also not the same question as "which
of those operations are actually doing well," and the survey's answer to that second question is
more complicated.

Why bigger isn't automatically better

If you've scaled up production, added a line, or picked up a distribution contract this past year,
this is a good week to pull your own numbers apart the same way. Revenue growth usually means new
costs arrived alongside it — more labor, more packaging, more cold-chain logistics, sometimes a
wholesale price that's lower per pound than what you were getting direct. None of that shows up
clearly on a top-line sales report. It shows up when you actually cost out a batch.

Three-quarters of the cheesemakers surveyed are producing 50,000 pounds a year or less, which is a
useful reminder that "specialty" in this business usually still means small. Small isn't a
limitation to apologize for. It's a structure that, done carefully, protects margin better than
scale does — fewer intermediaries, more direct pricing control, and a customer base that's paying
for the story as much as the wheel.

Trade coverage of the same survey has framed it as evidence that small specialty producers are
competing on a genuinely different set of terms than large commodity dairy operations, not a
smaller version of the same business. That distinction matters when you're setting a price. A
commodity operation lives and dies on cost-per-unit efficiency at scale. A specialty producer is
selling provenance, technique, and a limited run, and pricing it like a commodity — chasing volume
discounts, matching a competitor's shelf price without knowing their cost structure — is one of the
more common ways a growing shop quietly erodes the margin it worked hardest to build.

Where to take this next

This is exactly the ground covered in Pricing & Margin for Specialty Cheese, one of our
Education Committee's standing courses. It walks through per-batch costing, wholesale-versus-direct
pricing tradeoffs, and how to tell the difference between a sales number you should be proud of and
a margin number you should be worried about. If you've never sat down and costed a single batch
line by line, that's the place to start, and it's a better use of a January afternoon than staring
at a year-end sales total wondering why it doesn't feel as good as it should.

"I grew my volume for three years before I ever sat down and figured out I was making less per
wheel than when I started," one small-batch member told us after we shared an early draft of this
post with a few producers. That's the exact trap the course is built to help you spot before it
costs you a season.

If you've already got a pricing model you trust, we'd still like to hear from you. The Education
Committee is looking for a couple of member case studies for a future workshop, and a shop that has
actually solved this problem is more useful to the room than another instructor slide.

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The International Cheese Federation (ICF) and More Cheese are entirely fictional. This post is demonstration content created for MemberJunction. All people, organizations, events, courses, certifications, figures, and quotations in it are invented, and nothing here represents a real association, a real business, a real person, or real professional advice.