Chartered Accountants & Business Advisers


3 key actions to increase profitable sales


There is no doubt that adopting a very positive approach to sales is vital to growing your business but more sales isn’t enough – the key is to increase profitable sales!

On the way to profitable sales you might end up losing some customers and contracts that aren’t profitable.

But less can be more and your business will be better off not being held back by business that doesn’t make money.

Do the prices you actually charge generate profitable sales?

Every business should have a price list for the products and services it sells and this should be reviewed against competitors’ prices where possible.

Market intelligence on prices is a lot easier to gather where you can see prices on competitors’ websites or in shops and it’s a lot more difficult for service businesses. Nevertheless, try to find out what you can.

But your price list isn’t enough. The question is: what are your real prices once discounts, promotional deals and other adjustments have been applied?

And remember that selling prices aren’t just the tariff you might present to the next prospect. Existing customers are paying at rates agreed in the past – are those deals profitable for you?

Key action 1 – review your actual prices across all customers, understand why the prices you actually charge might differ from your standard tariff and see what you can change for the better.

Do you know the costs of the sales you’re making?

Pure costs of sale can be thought of as costs that would not be incurred if the sale was not made.

So, if you’re selling sofas then the sale of the next sofa requires you to buy the sofa from the manufacturer, pay for delivery to the customer, pay the sales assistant a commission etc. But do you take account of all of these costs when setting your prices? If not, profit will suffer.

Is your bookkeeping up to the task of measuring costs accurately to determine profitability?

In service businesses where you’re essentially selling the expertise of your team you need to be running a timesheet system in order to calculate your cost of sales.

Not doing timesheets? Start NOW!

Sales revenue less the costs of sale is your gross profit – an absolutely vital performance indicator.

Key action 2 – ensure you’re measuring your cost of sales accurately and that your gross profit is at the level you need it to be.

Our blog “Proof of Profit” is worth a look.

Are you targeting prospects who will buy what you want them to?

Knowing your costs and your gross profit is essential but many businesses destroy value simply by selling in to the wrong market, or by positioning their products / services in the wrong place.

Taking a premium product to a budget audience will get you nowhere because customers, if they but at all, will only be prepared to pay a low price that you won’t make a decent profit on.

A useful way to address this is to have a range of products / services which increase in quality and price as you move up the range.

Key action 3 – segment what you offer based on price and quality and then point your products / services at the right audience.

There’s so much to consider in the area of growing profitable sales and we’re only skimming the surface here.

Blue Dot Consulting runs Profit Improvement Programmes for businesses that want to dig deeper and come up with a practical Profit Improvement Plan (PIP). If you’re interested in a PIP for your business, please give me a ring on 020 7125 0270.

Sales | Margins | Profit | Cashflow

Find out more about profitability and the benefits of good bookkeeping