Would you like to make more money? If your answer is yes, your path may well be a differential pricing policy matching your price to the customer with their relationship with you. Do they see you as their valued resource or the low bidder? Clearly, all customers are not the same, and you should take advantage of the difference.
The key to the answer is the hit ratio (when you quote, how often do you get the order? If it’s 90% of the time, they would pay more had you only asked. If it’s less than 20% of the time, you’re wasting your time unless you lower your price.
Lurking in this is the reality that the opportunities to boost your bottom line lie in two customer groups. The first are those who see you as a trusted source and who give you the order 90%+ of the time—they would pay more if you only asked. The second are those who give the order less than 20% of the time—you must get into their ballpark with your price as not getting the order will put zero dollars on your bottom line.
Ideally, you would have a record of each of your customer’s hit ratio. If you don’t, you probablyÂ
know which ones give the order most of the time and those who don’t. Get started by targeted mark-ups or discounts on those accounts.
The profit miracle works because the additional money coming from these targeted changes increases the dollars left after out-of-pocket expenses are covered and they go straight to the bottom line.
This is a process that really works if undertaken systematically and The Management Guys have put together an approach to do just that.Â
Would you like to see how this might work for you? Just send Bob Lindgren your most recent P&L and we’ll work together to build your bottom line. bob.lindgren815@gmail.com