𝐖𝐡𝐚𝐭’𝐬 𝐭𝐡𝐞 𝐎𝐧𝐞 𝐎𝐯𝐞𝐫𝐥𝐨𝐨𝐤𝐞𝐝 𝐌𝐞𝐭𝐫𝐢𝐜 𝐓𝐡𝐚𝐭 𝐂𝐨𝐮𝐥𝐝 𝐓𝐫𝐚𝐧𝐬𝐟𝐨𝐫𝐦 𝐘𝐨𝐮𝐫 𝐂𝐨𝐦𝐩𝐚𝐧𝐲’𝐬 𝐕𝐚𝐥𝐮𝐞?
When clients first come to me to look at ways in which to increase the value of their business, there is usually one crucial metric which has been overlooked.
You know gross margin impacts your net profit, but have you considered the impact it has on the value of your company? When assessing your company’s value, investors will often scrutinise your gross profit margin (the difference between a company’s revenue and its cost of goods sold).
A high gross profit margin is a crucial factor for investors and potential acquirers as it indicates that a company has established pricing power through marketing differentiation, likely possessing a competitive advantage, making it more appealing to investors.
As a business owner, what can you do?
Apart from raising prices or reducing input costs, invest in carving out a point of differentiation for your business. When your customers see your business as unique, you are less likely to have to compete solely on price.
With that in mind, how will you charge a premium for a differentiated product or service, to supercharge your gross profit margin - and the value of your company?
#noblindspots #valuebuilder #businessvalue #businessgrowth
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1momakes sense to test it at a certain price and see how much value they perceive then raise it. far too often we overvalue our own good and services too. market will speak loudly.