What Is Profitability And 4 Questions You Need To Ask Yourself Now

The answer to the question “What is Profitability?” at a very basic level is the charging of clients or customers an amount for your products and services that is greater than the amount of actually providing the products or services.

The key question you must first ask yourself is whether the revenue you are generating is actually profitable. Just because cash is flowing into your business bank account from revenue doesn’t guarantee that you are making profit from the transaction.

A careful analysis of the prices you charge your clients or the price you sell your products for is imperative for the profitable success of your business.  This is called a profitability analysis. A business needs to ensure that it is making a decent margin on the revenue it is generating and carrying out a profitability analysis provides the information required to assess this.

A profitability analysis can be carried out at different levels of the business. It could be completed at the overall top level of the business or in a more detailed individual product or service.

Questions to ask yourself now:

  1. Am I charging the optimal amount for my product or service for my target market?
  2. Is there scope to raise my prices without losing business?
  3. Can I say with certainty that I know what the profitability profile of each of my products or service lines is?
  4. How can I reduce the cost of producing my product or service whilst still maintaining or increasing its price?

When it comes to generating profits, the better a business is at making sure that all of its revenue is profitable, the higher the chances of its ultimate success.  Performing a regular profitability analysis is a key tool for doing this

Now the big question to answer is – Is your Business Profit–Friendly?

It’s really easy to find out. Simply enter your details in the opt in box in the side bar of this blog and we will sent you details immediately of how you can take your FREE test (Valued at $37) and get your results instantly.

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