A Few Ideas for Increasing Profits

There are multiple ways in which you can raise your income. The most often pursued route is trying to get new customers. Most people think this is the only answer. First of all, it isn’t. Secondly, it’s one of the more difficult ways of raising your income. Getting new customers generally has substantial costs whether it’s money paid in advertising or time spent networking. Although you should always put effort into getting new clients, there are other options that are easier for increasing profits.

One of these is increasing the average transaction value. This partly involves raising prices. Many business owners are hesitant to do so. However, you need to look at the value of the product or service in which you are providing. Also, look for items that complement the product the customer is buying. For example, McDonald’s raises the average transaction value by supersizing. That is, asking customers if they want to get a larger soda and more fries. Look for creative ways to do this with your business.

Over time, you should develop a system for selling back-end products. These are products that aren’t your main product or service. They may be complements to main products. Or, they could be a product or service you introduced that are fairly similar to your other products. You were able to produce this product using the expertise you developed with selling your main product. Many of your best clients will be willing to buy back-end products from you.

Another technique involves increasing the frequency of customer purchases. The easiest customer to get is the one you already have. It has become a popular cliche. Yet, it has always been true. With this strategy, you can offer more promotions and discounts to your existing customer base.

You should also be active in generating referrals from your best customers. Generally, the top 20% of your customers generate 80% of your revenue. This does not just come from them buying directly from you. It also comes from them happily telling their friends and acquaintances about your business. To take full advantage of this, make sure your customers understand the benefits of your services. If you’re a tax professional, show your customer how he/she is saving money on taxes. These techniques should be leveraged simply because they are much less costly than the expense of getting new customers.

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One Response to A Few Ideas for Increasing Profits

  1. You are right, there are lots of business people out there that are hesitant to increase their prices because they think that once they do, they will lose customers and profits as well but the good news is, they are wrong! Thank you so much for posting this neat and very informative article. I like what you wrote and in addition to this, I’d like to share something that I watched regarding raising prices. Here it is http://marieforleo.com/2011/12/should-you-raise-prices/

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