20 Ways To Boost Your Profit Margins

20 Ways To Boost Your Profit Margins

A great way to increase your profits is to look at ways of increasing your profit margins. This can be unbelievably simple in many cases, yet outstandingly effective.

For most businesses, to increase profit margins, all they do is increase price but with the fierce competition around us these days, this is often not a very move for many businesses.  Once price increase is out of the table, the next option would be to increase the number of new customers. Even though getting new customers work, it can prove to be very expensive and the least profitable way to grow your business.

In this article, we have shown 20 different ways you can boost your profit margins without bringing in new customers. Just implementing one of them can have very significant impact on your bottom-line. But imagine how much your profit would increase if you implement half or all of the methods below in your business.


We know a man who owned a construction business that went bankrupt. When asked what happened, he said: “I was always the lowest bidder.” That meant he worked his brains out, did more projects than his competition, but still went bust. His mistake was trying to compete on price. Let the other guy play the “I’ve got the lowest price game.” You play: “I’ve got the best profit margin game.” That means not dwelling on price, but raising your prices and then providing quality, excellent customer service, while creating the perception that your price is still very competitive. In selling, perception is everything.

Quick Tips and Action Points:

  • Find the courage to charge more. You may be delighted to find it doesn’t change your customer flow one bit, while you simply make more money.
  • Have the lowest price on a few items, but maintain higher prices on everything else. That way you can promote low prices, while mostly selling high.
  • Try a 10 percent hike across the board, and then monitor the traffic flow.



Calculate net profits on everything you sell. Even a less expensive item can have a better profit margin than higher cost items. It’s the margin that matters. Put your time and energy into that which makes you the most cash.

Quick Tips and Action Points:

  • If you don’t know your profit margins, you’re working blind.
  • Low profit margin items can help you by bringing in customers, but you only make it worthwhile if you have a plan to steer those customers to your real profit producers.




Why do business owners discount? They think it will bring in more people and sales because people want a discount. That’s true, but people want a lot of others things as well, such as high quality, good service, prestige and more. If you focus your marketing messages on the latter, you simply don’t have to play the discount game because you will have made that agreement with your customer base via your marketing messages. You want them to think: “I’ll come here when I want the best, I’ll go to the discount store when I’m strapped for cash.”

Quick Tips and Action Points:

  • It’s up to you to mold customer perception about what kind of dealer you are. Strive to be a quality dealer, not a discount store.
  • Guarantee satisfaction. To get higher prices, you have to convince that you deliver the best, or their money back.
  • Target your efforts on high quality customers.



There’s no question that customer service pays off in higher profits. Your current and future income is dependent on how well you or your staff treat your customers and keep them loyal to you and your business.

Quick Tips and Action Points:

  • Regularly educate and train your staff and employees in good customer service principles and techniques.
  • Offer rewards such as “Employee of the Month” for the employees who do the best jobs, or who gets the most return or repeat customers or sales.
  • Create an easy-to-use form for your customers to fill out detailing their experience in dealing with your business, and have a question or two about their experience with a particular employee. Reward (or correct) the employee accordingly.
  • Give your customers rewards for completing surveys that help you control or grow your business.


No one says you have to do things the same way all the time, or the same way other businesses in your industry or profession do them. Look outside your industry and see what’s being done in other totally unrelated businesses. Then see if you can adopt and adapt them to fit your business.

Quick Tips and Action Points:

  • Banks in America got the great idea of drive-through windows from fast food restaurants. Totally unrelated businesses, yet the same concept can apply to both of them.
  • Keep your eyes and ears open for new, innovative or unusual ways to operate your business.
  • When you find a new idea, act on it right away. The longer you wait until you “perfect” it, the less chance you’ll have of implementing it and your competition might beat you to the punch.
  • Sell your employees and staff on the benefits of providing this new and unique service.
  • Inform and educate your customers and prospects of your new innovations, and let them know how they will benefit from them.



How much money a business brings in (their top line) is of little consequence when compared to how much money they earn after expenses (bottom line). Every time an employee or officer of your company takes something that belongs to the business home for their personal use, it hurts the bottom line profitability of the business. Bottom line profits are what run a business. The more profits a business has, the faster it can grow, the more technology it can implement, the more customers it can handle, the better service it can render, and the more salaries, bonuses and commissions it can pay its employees.

Quick Tips and Action Points:

  • Implement a bonus system based on bottom line profits, rather than gross sales or top line income, and then educate your employees as to how it will benefit them.
  • Reward them on their willingness to contribute, and well as the actual monetary figures and increases realized.




Allowing accounts to get behind in the payment of their bills can create real cash flow problems. Without a constant stream of cash flowing into your business, you can’t pay your expenses and salaries, and can’t provide the selection of products or level of service your customers want and expect. This is one of the most critical areas in business, yet it’s also one of the most overlooked and easiest to let get out of control.

Quick Tips and Action Points:

  • If possible, consider requiring (or at least asking for) payment at the time a product is purchased or a service is rendered.
  • Reduce the time between shipping a product or rendering a service and when you send the invoice or bill.
  • Include a bill with the product, and offer discounts for payment within a certain time period.
  • To bring errant accounts current, offer discounts for immediate payment, or payment by a certain date.



What you haphazardly pay out, without a plan or accountability, can hurt you as much, or more than, what you allow others to cheat you out of by not paying their bills. Every expense you make for your business should be planned, have a definite purpose, and be accounted for. It’s not okay to even once in a while spend something expectedly – even on a seemingly small item. You’re in business. And the purpose of your business is to make a profit. It’s the little leaks that sink big ships. This is an area that you have to be completely hard-nosed about and not let slip in the least.

Quick Tips and Action Points:

  • Check your bills. Don’t pay more than once for the same invoice.
  • Check all invoices to make sure they’re actual expenses. Oftentimes, companies will send what appears to be an invoice with an amount for you to pay. Your bookkeeper may simply go ahead and pay it without realizing that it was only a solicitation for a subscription or product that looked deceptively like an invoice.
  • Keep close track on any charges you make with a debit card, and deduct them from your account as soon as you can so you can keep accurate records of your finances and cash flow.
  • Make sure all charges on the invoice are accurate as agreed upon at the time of purchase. If you’ve negotiated shipping or installation charges to be paid by the vendor or supplier, make sure they don’t appear on your invoice.



Perhaps the largest expense in most businesses is that of paying the help. Employee’s costs and expenses can add up to tremendous sums, especially if not monitored and controlled. It’s so easy to get soft-hearted and want to give your employees raises, bonuses and other monetary awards. This is not to say that you shouldn’t do those things, but you also need to recognize that being soft-hearted is not the way to run a successful business – especially when your business may not be doing as well as it could (or should) be doing.

Quick Tips and Action Points:

  • Weigh the costs of doing certain types of work in-house with your own employees, versus subbing the work out to outside vendors or services that can perform the same work. In some cases you may have to pay a little more, but what you’ll save in employee benefits may more than offset the costs. And you won’t have to deal with vacations, sick leave and employee disagreements or hassles.
  • Temporary services can be used effectively for short term projects. Again, you may pay a little more, but when the job is done, or if you need to cut back on expenses, it’s easier to stop using the temporary service than it is to fire, lay-off or let an employee go.
  • Medical and dental insurance plans are nice to offer employees, but their costs can add up very quickly. If your employees require (or would like to participate in) an insurance plan, have them pay for a portion of the premium, and you pay the difference.
  • Part time employees are usually not subject to the same benefits as their full time counterparts. Insurance benefits and other employee benefits may not be necessary if the employee works fewer than full time hours.
  • Also get competitive bids for your insurance and other employee benefits from outside sources every few years to make sure you’re getting value for money.




People who buy based on quality will buy/sell higher priced products with better profit margins much easier than those that don’t. This means buying only lists which are guaranteed to deliver high-income people, or advertising in publications that the higher earners are reading.

Find the market first, and then deliver a high margin product to them. Low quality customers take a lot of time to serve, they buy less, but also take as much time to sell as wealthy people, if not more time.

Quick Tips and Action Points:

  • It’s not impossible to make high margin sales to lower quality customers, but there is simply less margin for error.
  • When you sell higher you may sell less, but you’ll also spend less on labour, marketing, etc., and come out better in the end.
  • Go over your client list. You’re sure to find some “dead weight.” Stop wasting your time on them. If they beg to come back and buy, name your price.



A Web page is a tool that can be used to increase your profit margins, as the costs associated with web marketing can be much lower for you. Get yourself a good web marketing plan.


A poorly tuned car wastes a lot of petrol. An inefficient business is certainly losing money it could easily hold onto. Do a top to bottom examination of how efficiently you’re running. You can hire an efficiency consultant, or educate yourself by reading up on ways to engineer efficiency in business organizations.

Quick Tips and Action Points:

  • Get employee input on how everyone can work smarter, not harder.
  • Leave no stone unturned. Look at all areas of your business.



When you set a budget, it’s like setting a goal. You know how much you are going to spend each month, and then you make sure you don’t go beyond it. If you have no monetary figure that tells you to stop spending and when, you most often won’t. This is tricky because you have to spend money to make money. A budget that is not well planned can cripple your ability to market. But that’s all part of the game. If you have to, take a budget management course or attend a seminar on the latest techniques.

Quick Tips and Action Points:

  • Make employees get purchase orders and approval from you before they buy anything.
  • Don’t be pound wise and penny foolish.
  • It’s tempting to cut ads and other marketing expenses, but be very careful – this is what brings in customers and sales. But you may be able to drop ads if you strive for and get free publicity.



Everyone is doing it, especially banks, credit card companies, telephone service providers, and more. Its little fees tagged on everywhere. It made the banks billions. Cash machines were originally created to save banks millions in labour costs, but then they started charging users a fee to use them because it was a “convenience.”

No one likes it, but it works because it’s what the market bears. You can tag fees onto the “little things” you do. More and more people expect them and pay them. Don’t forget late payment fees.

Quick Tips and Action Points:

  • The risk is alienating some customers. The benefit is potentially a significant new income stream.
  • Some companies now charge a fee for the privilege of paying by mail rather than by Internet, or automatic withdrawal.
  • Remember, this won’t work for everyone, but if you think creatively, you may find ways to add fees for services.




An amazing number of businesses keep machinery, hardware, outdated inventory lying around – it’s been around so long it become easy to ignore and invisible. Why not make a thorough inventory and hold an auction. It’s cash you can use. You might also rent anything you’re not using for a steady income.

Quick Tips and Action Points:

  • Consider trade or barter of your old stuff for what you need.
  • Give something away free as a sales stimulus.
  • Monitor your inventory at least once a year. Run a lean, mean machine.



You certainly have a lot of routines, things you do every day, the basic functions. Take another look at them and see where these can be made to work more efficiently through implementing systemized procedures. Some jobs can be lumped into one. And there’s always multitasking – doing more than one thing at the same time.

Quick Tips and Action Points:

  • Not as easy as it looks. Some studies show that multitasking actually leads to less efficient results. So be careful and measure results.
  • Remember the human element. People are not machines, but maybe machines can help free humans to concentrate on human tasks – especially dealing with customers.



The longer that money stays in your account, or gets into your account, the more interest you collect on that money. Never pay late, but only issue a check on the very last day of the time your debt is due. On the other hand, collect as fast as you can, when you can. The idea is to keep the maximum amount of cash “floating” in your account at all times, giving you an interest earning advantage.

Quick Tips and Action Points:

  • Use the credit card with the longest interest-free payback period – some are 50 days, or more.
  • Avoid late fees and penalties with strict attention to payment schedules.
  • Use credit cards with reward points, frequent flyer mile offers, etc.
  • Credit card statements make for easy accounting, records, etc. But at all costs resist the temptation to pay only the minimum sums in exchange for mercenary interest fees.



If you have ads that are doing nothing, or bringing in less than they cost, well, this is something that you just can’t have. If you’re not testing each ad each time, you don’t know if you’re making money or losing it. And what about your other marketing materials? Do you know what your brochures are really doing for you? Do they bring customers in, prompt orders, or merely inform? This can be tricky because sometimes you need to inform to lay the groundwork for future selling, but again, everything you do must be able to justify the cost.

Quick Tips and Action Points:

  • You may have to lose money by testing ads until you find one that works, but sooner or later, you have to make a decision to keep trying, or go to Plan B.
  • Get all the free advertising you can muster with press releases, promotions, etc.



Franchising your name or brand is a sure path to riches, if you can pull it off. The devil is in the details, and this requires great powers of organization. You must develop a system and model that others can plug into effortlessly, and a product and name people would be excited to be a part of.

Franchising runs from merely the sale of a name and nothing more, to providing training, back end support, technical assistance, and putting together a headquarters for all members to interact with on a regular basis.

Quick Tips and Action Points:

  • Deciding to franchise is a major decision, and will take far more money than you realize to make happen.
  • If you decide to buy a franchise, investigate the parent company down to the last nail – and talk to other franchise owners first.
  • Deliver what you promise, and only promise what you know you can deliver.



When you need to buy something, why pay the first price you are given? Why not haggle? If you don’t like the term haggle, then call it negotiating. The point is, you can often cut yourself a better deal on just about anything you need to conduct business – from the cost of advertising to your raw supplies. But you’ll never know how low you can get something until you ask.

The worst that can happen is that you’ll be told “No” by a supplier. The best that can happen is that you save huge amounts of money on what you need. Remember, if you don’t ask, you will not receive.

Quick Tips and Action Points:

  • Hone up your negotiating skills. The only thing between you and a bargain may be your ability to convince and persuade.
  • Drive a hard bargain – suggest to a supplier that you will switch to a competitor. Challenge your suppliers to meet or beat a lower price.



Now, another great way to make more money is to induce your captured customers to buy more, and more often. Never think of any customer as only “one sale.” Go into your sale with the predetermined goal, plan and idea that the first sale is only the beginning.

However, you do need strategies, techniques and methods to make it happen – it rarely just happens by itself.

A customer who has bought and left the premises still exists out there in his or her own world. You need to reach out into that world and go to where the customer is so you can entice them back for more. Out of sight should never mean out of mind to you. When you are out of sight of the customer, you soon will be out of their minds – but only if you let it happen.

Keep your name in the customers mind, make them think about you, and give them reasons to come back.

Finding new customers is 5 to 10 times more expensive than selling existing customers multiple times. Getting customers to buy more often is the big “secret” to business success, which really shouldn’t be a secret at all – yet for an amazing amount of sellers, it might as well be. Don’t be one of them. Plan and work to generate repeat sales and more frequent buying behavior, and you’ll see spectacular results.

Comodo SSL