Online Reporter
Business Reporter
DripTech CEO Bob Henson shared a counterintuitive business philosophy at a recent conference organised by the Confederation of Zimbabwe Industries (CZI): he aims for the smallest possible profit margin that still keeps his company viable.
Speaking to an audience of industry leaders, Henson outlined how this approach has transformed Zimbabwe’s irrigation sector over the past decade.
He said when Zimbabwe’s land redistribution programme took effect in the early 2000s, the irrigation equipment market effectively ground to a halt.
“The sale of irrigation equipment died for maybe 10 to 15 years,” Mr Henson explained.
During that period, DripTech had to find alternative ways to operate. The company identified that many of their products—particularly piping, water tanks, and fittings—were overpriced. This realisation led them into manufacturing.
“I don’t try and see how much margin I can make,” Mr Henson told the conference. “I see how little margin I can make and still stay in business.”
The goal, he explained, is to bring prices down to the point where increased sales volume compensates for the reduced margins.
When DripTech began manufacturing pipes around 10 years ago, they reduced the price of piping across Zimbabwe by 35 to 50 percent.
“The result was that we sold ten times more piping than we ever dreamed we would sell,” Mr Henson said.
Other manufacturers followed suit, reducing their prices as well. The outcome, according to Mr Henson, was positive for everyone involved—manufacturers, the farming sector, and urban developers who benefited from lower installation costs.
Henson offered a concrete example of the strategy in action. When DripTech invested in high-technology blow-moulding equipment to manufacture water tanks, the company needed to produce 600 units monthly to justify the investment. At that point, they were selling only about 60 tanks per month.
The tanks, which they had been purchasing from local manufacturers for between $660 each, could be produced for approximately $450 using their new equipment.
“In our second month, we produced and sold 900 tanks from a budget of hoping to produce 450,” Mr Henson said.
This increased production allowed them to reduce the price further, from $450 to $400 per tank. Within six months, production had reached 1 500 tanks monthly, enabling further price reductions.
Before the Iran war, the price had dropped to $325, roughly half of what the tanks had cost previously.
DripTech now sells about 3 500 tanks per month. While the margins are slim, Mr Henson noted they remain “more than adequate to justify the business” due to the high sales volume.
“The maths are straightforward,” Mr Henson said. “Perhaps only 0,1 percent of the population buys a tank in a year. But if you reduce the price by $10—which is about 3 percent—suddenly 0,2 percent of the population can afford one. That doubles your sales.”
