Price Strategically To Boost Profits
Let’s talk about profit. It’s a nice word. Great concept. Fabulous way to boost your business. But we don’t always give it the respect it deserves. Profit needs to be a priority.
The common wisdom is that a business needs sales. But all the sales in the world won't help you if there's no profit being earned. We all know how painful and stressful it can be to live paycheck-to-paycheck...so why would we want to build businesses that need to live sale-to-sale to keep bills paid? No thank you.
Of the entrepreneurs and small business owners I’ve met, and the clients I’ve worked with, there are 3 different Profit Personalities.
#1 - The Scrounger
This is the ‘profit is what’s left after I pay all my bills’ personality.
There isn’t a calculation involved in what profit margins are…it’s just kinda whatever is still sitting in their bank account at the end of the month.
Is this you?
You may be a Scrounger if you find yourself setting big annual/quarterly/monthly goals and then never having the financial resources available to execute on them. When an unexpected expense pops up, you're left scrounging around in couch cushions (figuratively and literally speaking) to come up with the funds. Or, you're slapping it all on credit and making it a problem for another day.
#2 - The Wobbler
This Profit Personality takes the approach of "I’ll add a little something, but don’t want to look greedy". There’s a calculation on how much profit to add into the mix for rates and project proposals, but the *actual* profit percentage that shows up on those proposals has less to do with that calculation - and more to do with whatever number they end up with after a few days (or weeks) of hemming and hawing and being worried about looking greedy.
Is this you?
You may be a Wobbler if you start off each proposal or pitch process with a beautiful fee in mind, but never actually ask for it. You probably also find yourself having moments of "Huh. Well this wasn’t really worth it…" while in the middle of projects or client engagements. And when the project wraps and you collect on your invoice there's not enough there to cancel out all the resentment.
#3 - The Strategist
This is a rare bunch, with an approach best described as "I know where I need to go, and this is what it takes to get there". Profit margins are strategic. They’re building nest eggs for future business investments, hedging their bets against scope creep, incorporating hazard pay for those pain in the butt clients, AND they’re giving themselves some negotiation wiggle room just in case someone asks for a discount.
Is this you?
This may be you if…well, frankly…things are going swimmingly and you’ve been rather smug as I described the first two profit personalities. When it's time to expand, make an investment or deal with a snafu you have the financial resources in place to take care of it stress free. Not every sale you make or client you work with brings in A+ profit margins...but when they don't it's because you've made a conscious decision that there's other value for you in that work.
Which Profit Personality Do You Want To Be?
Hands way up high in the air for transforming your approach to profit into that third one - supremely strategic.
To help you with that, check out the following resources here at DevonSmiley.com:
or, let's explore working together to whip those prices and profits into shape