Food for thought: There are other ways for you to make more money. Tip #1 is to increase profit margins. Read more on this blog as I will be talking about margins, and why you business must have good margin.
Most companies today focus on top of the line growth but savvy business entrepreneurs know that sometimes the easiest way to increase profit is to focus on their margins. Your company’s profit margin is the percentage of revenues that remain after deducting the cost of goods sold.
Why must you business have good margin?
My first business was an eCommerce store. We sold iPod accessories, gadget, speakers, headphones and had a relatively successful time. The business to doing 2 million pounds a year straight out the bat for 5 consecutive years.
The number one problem that I had with this business was always was my margins. I was selling other people’s products. I’ll be selling some Sony headphones or be selling an Apple products and etc.
I didn’t have any margin with that because the tendency will be customers likely be shopping on price. You go online, and you would compare and find the cheapest price on the products you want to buy. Which means it’s highly likely people will buy the cheapest price there is. This meant that stores would reduce their prices online, and the margins would be squeezed.
- What I did was I imported stuff from China using a website called alibaba.com. I would make my own packaging and brand it myself. It allowed me to get in up to the £20.
How To Increase Your Profit Margin?
- Increase the perceived value of your merchandise
Find ways to increase the perceived value of your brand. Content is essential for a number of reasons; (1) you need to educate an audience, maybe they don’t know they need your product and service, (2) make content that solves the customers problem. That’s important that you build a relationship, you build rapport with someone that potentially could be a customer. It also gives you expert status.
- Premium Pricing
The psychology of pricing: “You get what you pay for.” A lot of business owners and entrepreneurs tend to overlook how they are positioned in the market. A premium product in your business is more than just the price, it’s about the experience. Very often we sell just one product and leave it at that but what we don’t realise is people want more access to your business.
- Get more sales from your existing customers
What most business owners do after turning people into customers, is they go and try and get more leads. They go all the way back here and they try and get more leads. Guess what? All you need is to make extra products and services that you can sell to your clients.
So think about your margin.
Could we get our own version of this?
Can you leverage our time better?
It’s essential that you can do that in other ways that you can. You can get effective margin in your business is working one too many. If you work one too many, if you’re a coach or consultant that allows you to leverage your time more.
Think about what margin you could have in your business. Another quick thing with margin is you’re going to spend money acquiring a customer. It’s going to be time on advertising.