Are Reduced Margins A Certainty?

A bit of a debate started yesterday on Glasstalk about margins and how they will naturally become less due to the mature market place, competition and struggling economy. As proof of the opposite, I'm taking the view that just because things aren't so easy, there are ways to stay profitable.

One way to increase margins is to improve the quality of the product that is sold. High-end products can command a better profit margin. It's easier to sell a higher price to a customer when the product is a good one. Cheaper products can only achieve medium price ranges with poor profit margins.


The other way is to accept the financial situation we are all in. Loss leading offers are not the  way to bring the custom in when profit is needed so badly. It's time to implement those price increases that your manufacturers have been passing on and eating into your profit levels. Just because the price of a door might go up £30-50 doesn't mean you won't get that sale now. Just sell the benefits of the product and explain that raw materials prices have gone up. The last few leads I've sat I've explained how the current financial climate has caused raw material prices to go up, having a knock-on effect on our prices. They're are fully understanding as they know everyone, including themselves are having to pay more due to the rising cost of living.


Get your staff to do more. If you're busy and think you need to hire more staff, try using your current employees first before you add another wage to your bill. Perhaps give them a small pay rise to cover the extra work, but this will still be cheaper than taking on another member of staff when maybe you don't need to.


Increase your levels of personal service. You can command higher prices if the customer thinks you're doing more for them than the other company is willing to do. The more work they see you doing, the more justified the higher price becomes.


We don't have to be scared of higher prices. If we can embrace it in the right way, adapt to a more expensive market and communicate that well to the customer, there's no reason why companies can't start to recover their profit margins.