The 5 Myths of Mastering Profit Margins

Yes, every organisation wishes to increase their profit margins due to it being a direct impact on the bottom line, but there are five myths we need to dispel in order to truly master margins.

Do not fall for the following myths:

• Increasing margins can only be done by reducing costs
• Increasing margins can only be done by raising prices
• You should compare your profit margins to your competitors
• Profit margin and mark-up are the same
• We need to set a minimum profit margin target for everything we sell

To maximize margins, there are nine different profit levers you can pull:

• Pricing and payment terms
• Procurement and managing suppliers
• Cost of goods sold
• Supply chain optimization
• Customer growth and retention
• Employee empowerment and retention
• Brand recognition
• Operational excellence
• Innovating and collaborating

By mastering which of these levers to pull and when, you will be well on your way to maximizing your profit margins on every sale.

At Stratinis we add value to your business through our pricing software. Learn more on our website.