Revenue and profit – the two holy grails of any business. But many business owners confuse the two. Revenue is what comes in. Profit is what you get to keep.
However many businesses chase revenue and falsely believe they’re doing well because they’re making sales. But if they’re not making a decent margin, the net result will not reflect the work being put in.
When choosing what to sell concentrate on products/services where you make the highest margin and have the lowest cost of goods sold, which is not necessarily the same as highest revenue.
A point we make very strongly in our marketing and cash flow workshops and once again reinforced by an accountant I heard this morning at a local networking event.
And now’s a great time to go back over last year’s financials, look at every product/service you sold and compare the numbers. Do not rely on your gut feel. The numbers will not lie and you might be surprised.
Oh, and if you find yourself selling some lower margin products because you feel it’s easier, believe me it’s the same amount (or even less) work to sell a higher priced product. You just need to know how to do it.
Which is where our Persuasion Engineering consulting comes in. Aimed at organisations who need to sell higher value B2B or B2C products, our system will help you close more profitable deals with clients who will appreciate what you can do for them.
Interested? Call me on (02) 9499-7958 for a complimentary consultation.
P.S. I have a fascinating table which starkly demonstrates pricing/margin/profitability relationships. Reply to this email with “Pricing Table” and I’ll send it to you.