How to increase the margin on sales

How much do you sell your product for? Do you know how much it costs? If you answer yes to both of these questions, then you know what is your margin on sales. This concept defines the difference between the retail price of a good or service and its total costs, including both direct costs, such as raw materials, and indirect costs, such as personnel or logistics costs.

What variables influence the margin on sales?

Before thinking about how to increase the margin on sales, it is necessary to know what factors can influence its fluctuations.. The margin on sales does not always remain unchanged and, in fact, is often affected by external factors, such as:

• The adoption of new regulatory measures that complicate the number of procedures required for exporting a product or importing the raw materials needed to manufacture it.
• The imposition of an additional levy, as a result of policy measures introduced following a change of government.
• Rising fuel costs, affecting the transport and distribution function.
• The shortage of certain components, which are necessary to be able to produce the good or offer the service.
• Natural disasters or economic crises, which affect the demand for the product or service.

It can also increase or decrease, as a result of changes in internal factors. These include the following:

• Increase in the cost of raw materials.
• The need to add new staff to the workforce, with a consequent increase in staff costs.
• Increase in the price per hour of overtime, due to the update of the applicable collective agreement.
• Breakage of one of the equipment production, which makes it necessary to invest in new machines.
• Need to adapt processes to current demand by incorporating new, more expensive technology.

How to increase the margin on sales?

There is a very simple way to increase the margin on sales, which is by raising the price at which the product or service is offered. However, the, If the margin on unit sales were to increase, this would not imply a proportional increase in revenue, as customers could be lost as a result of this measure.; This is especially the case when it is not compensated by new benefits for consumers who will have to pay a higher amount.

The most effective way to increase the margin on sales is to drive savings in the organisation.. Savings policies can be approached in a variety of ways, but some of the most successful are as follows:

• Energy saving policies, to cut electricity costs. They can start by training all employees to use electricity responsibly.
• Recycling policies, to boost the use of available resources and prevent waste, supporting the company's sustainability objective. They can be applied, for example, to reusing printer ink cartridges or minimising the use of disposable coffee cups in the office by replacing them with glass or ceramic ones.
• Policy on flexible compensation, The new system, through which cash wages are combined with other benefits, such as Ticket Restaurant o Childcare Ticket.

Finally, it should not be forgotten that Another way to take control of the factors influencing the margin on sales is to centralise invoices.. Petrol expenses are one of those that can be centralised, receiving the refuelling invoices for all the company's vehicles at the same time and in the same document, thus improving their management. Ticket Gasolina allows you to achieve this while ensuring significant discounts with each refuelling.