While accountants are trained to provide a full view of what happened to the finances of a business, an economist or business analyst will speak of “thinking at the margin”. To “think at the margin” …Continue reading
The weighted average contribution margin of a company or business unit is the amount by which an incremental unit of net sales contributes to total profit. For a single product business, the contribution margin is …Continue reading
While this advice is admittedly self serving, I’ve grown very skeptical of the recent trend of B2B Pricing Consultants pairing off with B2B Pricing Software Companies as “strategic partners”. The issue isn’t the pricing software. …Continue reading
If you’re managing a decent sized distributor, you’ve probably been approached by at least one consulting firm to talk about pricing. The concept sounds good on paper: use a few targeted price increase campaigns to …Continue reading
True Strategic Pricing isn’t about simply charging more money In fact, that’s a very risky long term value creation lever. The market eventually figures out what you’re doing.
Pricing leaders know that you need to be as good at creating value as your are at claiming it.
For a sustainable margin lift, look at these case studies exploring how to reshape the value you offer customers – and cost of delivering that value – to create a competitive advantage.Continue reading
The worst thing you can do with your new customer profitability reporting is sally forth to fire the unprofitable customers
Instead, look at this as an opportunity to reshape the focus of your selling team. Which accounts do we want? Can we fix our profitability issues by growing within an account? Are there product mix or policy enforcement opportunities which can improve the profitability of the business we already enjoy?
Or are we selling services the customer doesn’t really need (or want)? Giving us a chance to simplify our offering before we’re removed by a low-cost competitor.
Sometimes the best way to improve customer profitability is to simply focus on value…
How to Raise Your Margins With Pricing & Product Sourcing
You should have knowledge of how to raise your margins and margin improvement if you want to survive in the market. This is a part of your product sourcing strategy for a long term and consistent growth.
In the recent past, people were under the impression that margin management is impossible. But this is not the case anymore. It is a reality and you can learn the right way of doing it in order to achieve your goals.
Some of these profit-reducing activities can be avoided altogether if you know the right strategies. They will help you avoid wasting a lot of money and manage your business in the right way. In fact, you do not even need to do any margin management at all.
An important thing that you should keep in mind is that you cannot expect to make more profits when there are customers who will not purchase your products. It would just be ridiculous and you should know better.
This is not always the case but one must understand that sales is not always about products. You cannot expect to sell more products when there are customers who would rather purchase other products. In fact, these customers can be your most profitable customers.
If you have customers who are very cautious about spending money on products and they are very particular about what they purchase, they will be your most profitable customers. This is a fact and you should keep in mind this before you start your product sourcing. Your goal should be to find them and convert them into your clients.
These are the types of customers that you should look for when you are raising your margins. They will be your most profitable customers for you. These customers are known as profitable products. And their prices will definitely reflect the profit level of your company.
In fact, they may be the ones who are used to low margin prices. They can pay a high price for certain products so as to get a product of good quality and it would still be very affordable.
The next point that you should consider is that you should have a good distribution network in place. You should be able to distribute the profitable products to your customers. This will mean that you are in a good position to find profitable products and you do not have to spend money on purchasing them.
You can also use the Internet to increase your business and supply the products. This is because your customers will go online to look for your products. Therefore, you can get online and start marketing your products online so as to raise your profit margins.
Being able to work with your customers is the key to your success. This is why you should take the time to understand your customers and ask questions so as to understand their needs and desires.
When you have answers to these questions, you can easily build your profit margins. You can create a relationship with your customers that will help you grow in the future.