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5 Ways to Increase Your Net Profit Margin

5 Ways to Increase Your Net Profit Margin

I once heard a business owner say “I’m not in business to make money, but to help people!” That’s a noble statement, but let’s face it, most of us would like to make a good living with our business as well as helping our customers. A successful business needs to have a positive net profit margin or it won’t stay in business for long.

Here are 5 ways to increase your profit margin:

1. Focus on selling high-margin products and services.

 Calculate the net profit margin on each of your products and services and then promote those with the highest.  Consider abandoning the lowest-margin products or services.

2. Sell only quality products and services.

By selling quality items, you’ll be able to increase your prices.  Emphasize the quality of your product.  Make sure your existing clients can afford the higher quality products and that your profit margin is higher for these products than for less quality products.

3. Sell an exclusive label or become an expert.

Since you are the only one selling this product your customers will pay the higher price you charge because they can’t get the same product somewhere else.  Likewise, by developing a niche and becoming an expert in an area with a limited number of service providers, you can increase your prices.

4. Hire a commission-only sales team.

By employing commission-only sales people, you avoid many of the unnecessary insurance and fringe benefit expenses and ensure that you only pay based on performance.

5. Reduce all costs by 10%. 

In conjunction with creating your budget, try to reduce all costs by 10% by challenging every line item.  Get three quotes for every expense category (this does not necessarily apply to your CPA, since a good CPA is priceless!  :) ).


Kristin Allen

Allen & Company, PC  - a CPA firm serving Kennesaw, Marietta, Acworth, Woodstock and north Atlanta.  Providing accounting, financial statement audit, taxation, and advisory services for individuals and businesses.  Extensive experience working with franchised quick service restaurants and other franchised businesses.