How do I improve my profit margin? — Answers

2 min read

PriceBiggest lever

Cost controlTrim waste

Product mixSell better work

The levers

Four levers move margin: price (the most powerful — see pricing for profit); direct costs (better supplier terms, less waste); overheads (cut what doesn't earn its keep); and mix (sell more of your higher-margin lines). Track your net margin and gross margin so you know which lever to pull.

Where to start

Start with pricing and mix — they lift margin without cutting quality. Then attack unproductive overheads. Avoid cutting costs that drive revenue. Model the effect of each change on your break-even point before acting. If a margin dip is driven by a temporary cost spike, a short-term facility can bridge it while you reprice.

What it means for you

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Frequently asked questions

What's the fastest way to improve margin?

Usually a considered price increase, because it flows almost entirely to profit. Cutting waste and shifting to higher-margin work help too. Avoid across-the-board cost cuts that damage the revenue you're trying to protect.

Should I cut costs or raise prices?

Both have a place, but raising prices typically moves margin more than equivalent cost-cutting, and doesn't risk quality. Start with pricing and mix, then trim genuinely unproductive costs.