Have you examined your gross margin from each client or by each product or revenue line recently? If 20 percent of sales are grossing a 5 percent margin, 70 percent are grossing a 30 percent margin, and 10 percent are grossing a 50 percent margin, which sector should you focus on growing? Clearly, you'd want to expand the 10 percent of sales that gross the most. The same goes for products.

Pro tip: Knowing your ideal margin and benchmarking across the board will help you evaluate which products or services to increase or reduce. You may need to raise prices or decrease costs on products that aren't netting enough. Justifying your cost of goods sold based on the product or service you're selling is crucial to increasing overall profits.

Published on: Feb 22, 2019