Profit, according to Investopedia, is defined as a financial benefit that is realized when the amount of revenue gained from a business activity exceeds the expenses, costs and taxes needed to sustain the activity. Any profit that is gained goes to the business owners, who may or may not decide to spend it on the business.
Profit is not the same as sales or revenue yet you might hear business owners use these terms interchangeably.
Total Revenue Less Total Expenses = Profit
When you’re profitable, that means you’re in “the black” and have access to more resources and opportunities to continue growing your business.
So, what does this have to do with pricing? Everything!
When you charge enough to pay all of your business expenses, you’ll generate profit. But oftentimes, small business owners leave two key numbers out of their pricing formula.
- Their salary – hourly rate (yes, that’s an expense!)
- Profit margin
These numbers aren’t optional if your goal is to generate profit. They’re required.
You don’t need to work harder to generate consistent revenue and profit, you just have to work smarter. For instance, getting more clients and selling more may not solve your profit issue if you’re spending money at a rate faster than it’s coming in. The solution isn’t to just pick a number or simply charge (less than) what your competitors are charging.
The solution is to create a simple and easy to use profitable pricing plan for your business that allows you to get paid what you desire.
Let’s fix your pricing challenges, once and for all.
Join me for my upcoming Price For Profit Bootcamp. But hurry, space is limited. Can’t attend the live virtual bootcamp? Then grab the self paced Price For Profit Course! Get all the details here.