There are some simple things you can do today, to start increasing your profits without winning new clients. Making some minor changes to the way you do business will be barely noticeable to anyone- apart from you, of course, as you’ll know you are becoming more profitable.
1. Increase your prices. No really. A small increase in price will not drive your customers away. Even if it does drive some away, it will be a small number and you will still be better off with your remaining customers at the increased prices. “Amazon raised its price of annual Prime Subscriptions from $79 to $99 in 2014. Despite the $20 increase, the company expected to lose less than 5% of customers, resulting in a hefty $400 million increase in income.” John Boitnott, Oct 7, 2014 “In a McKinsey study with the Global 1200, they found that a 1% price increase – if the demand remained constant – would result on average in an 11% increase in profits. Not bad.” Richard Ruff, Feb 9, 2015 Getting the picture?
2. Price alignment. Are you charging all your customers the same amount for similar products or services? Get everyone on the same price list or rate card. You may be charging some customers the same rate card you agreed when you signed the contract in 2005. Get up to speed.
3.Do not discount. It will be the death of your company. Just as incremental price increases can increase your profit, so can the same incremental discounts be the death of you. Don’t do it. Emphasize the value you bring. Not the price.
4. Cash discount from suppliers. It is better to get a discount to pay upfront, rather than pay full price and delay payment, even if you are borrowing. Just ask. They can only say no. And the chances are they won’t ALL say no.
5. Check supplier bills. Do not assume that everyone invoices you correctly. Humans make mistakes. Are they overcharging you? Duplicating invoices? Do they add up? I have personally seen atrocious invoicing. Checking invoices from a film production company and questioning them once saved me (or rather the company I worked for at the time) £40K for one TV ad.
6. Same fixed costs, but cheaper. Check your running costs. Don’t change what you’re getting. Just pay less for it. There is a lot of competition out there for basic business supplies. For instance, everyone needs electricity. But are you paying the cheapest you can for it? There are companies out there who will analyze your usage and tell you what the best rate you can get is and from where. And it’s free! The same goes with phone calls, broadband, even your stationery. Prices really differ from supplier to supplier for the exact same stationery.
7. Quotes for Capital Expenditure. For IT equipment, decide on a preferred supplier, which you promise to use as long as they always charge you 10% lower than if you bought directly from source. It works. I’ve done it. Their discount is more than yours so they still make a profit. Don’t worry about them -worry about you. For any other big ticket item, never EVER buy anything unless you acquired three separate quotes. Make this a company rule.