Boosting Your Margins In Difficult Of Times

There's no special formula or magic wand, though I wish there were

. What we do have is a proven set of tactics that have been effective in increasing margins, even in the most difficult of markets. Pick and choose from this list of specific, proven tactics, and then methodically apply them over time, and watch your margins slowly grow.

Promote higher margin items: In every industry with which Ive been involved, there are high volume items that almost every sales person focuses on, and then there are very low volume items that most people ignore. Thats too bad, because the high volume items are usually the lowest margin, while the odd ball requisition items carry margins that are often multiple times higher.

Add a point to routine quotes and bids: We fall into habits and just naturally put a standard mark up on the final price. Break out of the rut, by trying one point higher. If you routinely quote some product category at 20 percent gross profit, try it two or three times at 21 percent, or 20 . Chances are you are leaving some money on the table by using the same mark ups youve used for years.

Add a point on price and product changes: Lets say several of your customers are routinely buying a product line from you. You have it in at 18 percent gross margin. The manufacturer raises his price to you 3 percent. You refigure the customers new price at 19 percent margin. Youve just gained a point.

Obtain the competitions pricing: We all try to do this before the deal is done. It is, however, much easier to gain this information after a deal is done and then use it for the next round. After the deal is done, and the customer has made up his mind, just ask about the competitive pricing. Ask the customer to share with you the prices from everyone else, after the business has been awarded. At this point, theres little pressure on the customer to keep that information confidential. After all, its a done deal. No harm in divulging that now.

Give the customer a reason to pay more to buy it from you: So many B2B salespeople look on every sales call as purely a discussion of product and price that they fail to consider the totality of the factors that influence the customer to buy. Now, if there is absolutely no difference between buying it from you and buying it from the other guy, than the customer should go with the lowest price. However, that is rarely the case. Your job is to identify all the things that are different when the customer buys it from you. Then when the customer says, Youre a point or two too high, instead of discounting, share with the customer what he/she gets in exchange for that point or two.

by: Dave Kahle

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