5 Tips To Increase Profit In Your Business
Aspiring entrepreneurs have their own reasons for starting their own business. They either want to pursue their passion, or are looking to do something they’ve never done before. Doing business means adapting to constant change and evolution. It requires careful management execution and transparent accounting procedures.
Whether you’re in it for income or to satisfy a hobby, the general notion is that when you do business, you need to earn profit to stay afloat and be successful. But things aren’t that easy because your financial investments won’t be handed back to you on a silver platter. Earning profit can be daunting especially in this age when nations are reporting declines in economic growth.
If your sales movement is experiencing a standstill, here are 5 tips you can follow to help increase your profit:
Adjust your pricing
It’s natural to have the mentality of providing low pricing to keep up with your competitors. Some entrepreneurs believe that the lower their prices are, the more revenue they’ll earn.According to research, a 1% price escalation can help in raising your operating profit to about 11%. Pricing hikes can be implemented within a few months and you’ll immediately see the impact it has. If you want to improve your cash flow, you need to improve product pricing.
Online shopping giant Amazon increased the price of their annual Prime subscription from $79 to $99 back in 2014. Despite the rise in pricing and about 5% customer loss, their move resulted to a $400 million extra income.
Minimize discounts as much as possible
From a marketing standpoint, it makes sense to give discounts, especially if you’re trying to rid yourself of inventory that’s been sitting on the shelf for some time. By doing this you’re hoping you’ll get a steady stream of customers who’ll be loyal to your products. The downside of “constantly” offering discounts is that your lowered prices become the standard. Customers can get lost in this new pricing and expect the same thing when the products becomes for sale again. The key factor is communication and explaining why they’re being given discounts.
Boost your best products
Business owners need to learn how to generate the maximum value from their highest selling products. It may help to up sell complementary services to get more revenue from loyal customers.
Find efficiency gains
This isn’t solely about operating cost reduction but about finding alternatives. You want to get the same value but at a lower price. Find ways to lessen monthly deductions on subscriptions, memberships and fees that you’re currently paying for. If you feel your business can run without a particular service or if it’s something you can do on your own, pick wisely and discontinue this subscription.
Have monthly profit targets
Setting achievable and realistic targets will help you put in more effort to pull your company’s revenue. Take time to analyze weekly sales to see what you can do better the next time.
John Lee is a freelance writer and a business enthusiast. He loves giving tips about accounting. He is currently works in Accounting Software Company in Philippines.