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Where does your profit come from?

September 14, 2018

This is the exact question to ask yourself if you want to work smarter, not harder.

Take the example where we were engaged to undertake a product costing analysis for a business that basically sold 3 main types of products. After reviewing the profitability of producing each of these products, it became clear that one of the products was far more profitable than others. This was a surprise for the business owners as the lower profitability products contributed to the greatest top-line revenues and historically had been their main focus.

So with a new focus for the sales team and fast forward 12months, gross profit margin increased from 28% to 35%. This combined with additional sales growth, resulted in an additional $550,000 of profit.

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Xero Accounting Software
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