If your business is struggling and you need to improve your ways on how to earn more profit, you need to study every detail of your business. While you pay much for your advertising and other marketing campaigns, follow these four ways to increase profitability .
For example; if you have 100 customers that pay you $10 per month, that total’s $1000 each month. But, if you can find a way to increase the price of your product, that same 100 customers will now be paying $20 per month. That means you’re now getting $2000 each month instead of just the $1000 you started with.
A key to remember about this option is, if you are increasing the price of your service, the customer will expect more or a better value.
Using our previous example; you now have 200 customers paying $10 per month and that gives you the same $2000 each month. Maybe it sounds easier said than done, however, just think about how you got your first 100 customers in the first place. All you have to do is reach the same types of people. Increase your budget for advertising and use those same methods that worked before.
You could also use a referral system with your existing customers.
Let’s use toothpaste as an example for this one. When I was little, dentists recommended that you brush your teeth twice a day and go in once a year for a check-up and a cleaning.
More recently, the recommendation has changed to brushing three times a day and visiting the dentist twice a year. This increase will obviously require that the customer now spend more money on toothpaste, because they’re using more of it; more on toothbrushes, because they ware out more quickly; and double on their yearly dental costs! A whole group of related products increase as usage increases.
Also related to this option is the ability to create an acceptable replacement. There are a lot of people who don’t have the time to brush their teeth 3 times each day. Well, now the gum companies can profit with their “whitening” and “cavity protection” products. Chewing gum is now an acceptable alternative to brushing your teeth.
Look back at our example of 100 customers paying $10 per month, and let’s breakdown the costs. Let’s say of that $10, your company cost is $1.50 per product. Here’s where you take a look at all your options and see where cuts can be made in order to decrease your costs to $1.00.
If you can find a way to decrease your fulfillment, your company will be more profitable.