Sensitivity Analysis: Experiment with Changes to Your Business

What is sensitivity analysis? Free tool shows impact of changes on business; instantly! Use this free Business Modelling Tool to see the impact of (e.g.):percentage change in pricechange in sales revenuestaff numbers changeAccounts Payable and Receivable change and the impact on cash flowimpact of changes on profitabilitychange on business selling pricewhat revenue do you need […]

SM1.0 How 1% Price Change Gave 11% Profit Increase

Price is a major determinant of the profitability of your business!  A price change of as little as 1% can often lead to profit increases of up to 11%.  A consultant study across 1,200 major businesses found that a 1-2% increase in price, assuming demand remained constant, on average would have increased the company’s profit by 11%. Clearly, this could be a quick boost to your company’s profitability.

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For a quick example of the impact of a price change, consider a business turning over $500,000 per year.  Let us further assume that it makes a 5% profit on that, which gives it a profit of $25,000. If it increased its price by 1%, and assuming demand remained constant, that would lead to an extra $5,000 in income. This extra $5,000 over the original $25,000 is a 11% improvement.  This is a yellow belt article.   

SM1.1 Rapid Profit Increase from Price Increase

As was outlined in the introduction to our Pricing Module, the extra profit from even small changes in the prices of your product goes 100% to your bottom line Profit (assuming demand doesn’t change).  Consider a business turning over $500,000 per year. Let us further assume that it makes a 5% profit on that, which gives it a Profit of $25,000.  If it increased its price by 1%, and assuming demand remained constant, that would lead to an extra $5,000 in Income. This extra $5,000 profit, over the original $25,000 profit, is an 11% improvement.  In keeping with our 80/20 philosophy this article discusses a rapid change to your pricing system that can flow virtually 100% to your bottom line Profit. It is a rapid, and not very subtle, change that you can later adapt to make it more focused and more successful.  This is a yellow belt article

SM2.0 80/20 Principle – Double Sales, Triple Profits

Introducing the 80/20 Principal The 80/20 Principle asserts that a minority of causes, inputs or effort usually lead to a majority of the results, outputs or rewards. Taken literally, this means that 80 percent of what you achieve in your job comes from 20 percent of the time spent. This implies that: 80% of your […]

Increase Your Profits & Determine Optimal Pricing

Streamline My Existing Operation: Optimise100 There is no science to how you can improve your profits or turn around a lagging or troubled business but the group of techniques that have been collected in this article will give you some insight into opportunities to dramatically improve your profit. This article will focus on optimising your […]

Boost Your Cash Flow, Learn Pricing Strategies and Improve Productivity

10 Ways to Improve Cashflow If you own a business and sales, or your top line, are growing at a rampant pace and you’re increasing profits each year, you’re certainly headed in the right direction. But don’t put your guard down. Even growing, profitable companies can be hit with cashflow problems if their finance, operations […]

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