There is always a balance to maximizing profits. One can’t usually adopt a single strategy, but a mix of things to reach their objectives. We have found that there is no free lunch and a tradeoff must be made to increase profits, such as lowing prices for higher volume, or lowering cost in order to lower prices. The key is to make sure you analyze your options before making a change, i.e. a 10% price decrease to get 12% higher volume could result in 5% lower margin cost if margin rates fell 15%.
What kind of tradeoffs do you make and how do you measure if your tradeoff was worth the effort?
Optimal Management is the premier management consulting company to the staffing industry. We act as mentors to owners and managers to maximize their sales, profits and value of their company. We become an extension of our clients operations and are there for all of their staffing and business needs, from sales, marketing and compensation plans, to finance, M&A, general management and everything in between.
Source: Optimal Blog