When you think about profits, you may assume that your focus should be on the price of the product or service…

But many company’s cash flow and profits do not come just from the list price of your products or services. Boost your profits here is how:

Check to see how quickly you’re making collections. Cutting that time may make up the needed profits without any price increase.

Look at all discounts and allowances you offer. These factors affect your revenues and profits, so you need to review them before assuming that price is the culprit. Are customers taking advantage of quantity discounts to stock up inexpensively and then not buying between the discount periods? If so, you have a problem with your sales promotion and your marketing calendar/plan not your list price.

Examine how you assess fees. Perhaps your company is failing to collect the appropriate fees in some cases. It’s very important to consider this aspect if you offer a service fee.

Determine whether your fee structure is out of date. If it is, your cost structure likely isn’t reflected accurately.

Here is an example structure that we at, 11/11 media, use for our clients.

Say that you discover the typical discount structure in the market where you want introduce your product is 30/10/5. What does that mean? If you start with a $100.00 list price, the retailer pays at a discount of 30 percent off the list price (.30x$100=$70). The retailer, who pays $70 for the product marks it up to (approximate) $100 and makes about $30 in gross profit.

The 30/10/5 discount structure tells you that other intermediaries exist, one for each discount listed. The distributor, who sells the product to the retailer, has a discount of 10 percent off the price that he charges the retailer. That’s (.10x$70=$7) $7 of gross profit for the distributor. And the distributor must have paid $70-$7, or $63, for the product to another intermediary (may be a wholesaler). The marketer sells to this intermediary. And the 30/10/5 formula shows that this intermediary receive a 5 percent discount (.05x$63=$3.15) is $3.15 in profit for her.

Subtracting again, you can also determinate that the marketer must sell the product to this first intermediary at $63-$3.15, or $59.85. You, as the marketer, must give away more than 40 percent of that $100 list price to intermediaries if you use this discount structure. So you have to calculate any profit you make from a $100 list price as cost substrate from your net of $58.85. That’s all you’ll ever see from those $100.