Can you really increase your profit without raising your prices?  If we go by the profit-maximising principle of economics, yes.  The underlying reason is that our customers don’t like it when we raise prices.  

This is not to say that we shouldn’t.  Let’s get this straight: we need to increase our prices to reflect improvements in our services because it is good business practice.  

However, there will be some situations when raising prices will do more harm than good for the business, especially when we do business in a very competitive field or when our clients are experiencing some form of financial strain due to economic conditions.  When this happens, we turn to this very important economic principle to help us maintain or increase our bottom line.  

• Review your costs periodically.  

Work with your finance and accounting team to schedule a periodic cost review.  You may do this on a quarterly, bi-annually, or annually.  How often you do this review depends on the type of business you do, the industry you compete in, and the characteristics of suppliers. 

The questions you ask are simple.  Are there expenses you can eliminate?  Are there substitutes for the goods and services you buy from your suppliers?  Are their alternative suppliers who can offer the product or service you buy at a similar quality but at a cheaper price? 

Let’s say you own a small retail store.  Can you negotiate with wholesalers for better prices?  Can you find another wholesaler supplying the same products at cheaper prices?  Can you find a different location with better foot traffic but at a similar or even cheaper rent? 

You can uncover savings that directly impact your profit margins by periodically reassessing your costs. 

• Review your processes.  

Just as you review your costs, reviewing your processes periodically is also good practice.  Are they still efficient and cost-effective?  Can you make it more efficient?  

Let’s assume you own a café or restaurant.  Can you create a more cost-effective menu that maintains the same level of quality that your customers have grown to expect from your business?  Can you find substitute ingredients?  Is there a better way to store ingredients and manage inventory to avoid spoilage?  Can you offer meals locally using inexpensive and widely available ingredients?  

Streamlining your processes can increase productivity and minimise waste, ultimately boosting your profits. 

• Review available technology.  

In the age of automation and artificial intelligence, there are available tools that can help small businesses streamline their processes so that your team can focus on what matters the most. 

After reviewing your processes, you can start identifying repetitive and recurring tasks that you can automate.  This can involve scheduling meetings or periodic reviews, such as cost and process reviews.  This can also involve organising related project-based tasks. 

Platforms such as Asana, Monday or Trello can help you organise your team and their tasks.  These productivity management tools already incorporate AI into their interface to help you automate further. 

Another area that will benefit from technology use is customer relationship management.  Many businesses already use CRM to help with leads generation and customer onboarding, among many other needs.  These platforms also incorporate AI to benefit businesses further. 

Automation and productivity tools can change how your run your business.  By embracing technology, you can work smarter, not harder, and free up valuable time to focus on further growing your business. 

Increasing profits doesn’t always mean raising prices.  By reviewing costs, optimising processes, and embracing technology, you can pave the way for sustainable growth and success.  

Do you have your own tips on how you raise profits without increasing your prices?  Please send me a message, and I’d love to explore that with you.