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Which services or products make us the most profit?
Business

Which services or products make us the most profit?

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Back to all posts
Which services or products make us the most profit?
Business

Which services or products make us the most profit?

You review your sales and see a large portion of revenue coming from a specific service or product. Naturally you think you should focus on increasing sales in this area. But - looks can be deceiving!

Revenue doesn't always mean profit

Revenue doesn't always relate to profit. I've looked under the hood before in my own businesses in the past and found exactly that.

We would have customers that were responsible for providing a large part of our overall revenue. Unfortunately, when I dug a little deeper and looked at the actual hours our team had compiled, I found that we weren't always profitable on these projects.In other words, we were actually losing money on these jobs.

Which services or products make us the most profit?

This can be a tricky situation for small businesses. You need a certain amount of money flowing into your company every month to stay in business. So some revenue, even if it isn't necessarily profitable is better them none at all, right?

Well, in the short term you may be right, but long term, a chronic case of losing money can spell the end for a small business.

First, you need to understand which products or services are the most profitable and which are the least. Remember to focus on the profit, not the revenue. In other words not just how much money you make overall from a particular product, but exactly how much does it take to produce that product and how much money is left over.

Understanding your profit

You will need to:

1. Compare the actual hours and capital you have spent on the specific services and product versus how much money you billed for it.

2. Know the exact profit margin you have on every product you offer.

3. Remember to include all of the costs related to producing the income, not just the actual production or sales process.

4. Know who has time into each item and how much?

Sometimes there are substantial hours and overhead unaccounted for but involved in a sale.

Once you have those numbers figured out, you can begin to analyze which of your services or products generate the most profit for your company. The information is critical for helping you make decisions moving forward.

Focusing exclusively on the highest profit product or service may not be feasible, since customers may come to you for a host of things or the market size might not bear it, but the knowledge will allow you to focus on high-profit areas and find a better mix.

Use Dryrun to prioritize tasks, ensure proper focus on your most critical areas and align key staff with your most profitable customers.

Dryrun delivers clear, actionable forecasts in a fraction of the time you spend in spreadsheets.

Book your DISCOVERY CALL to learn about the Dryrun advantage or start your FREE TRIAL today!

See if Dryrun is a fit for you.

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