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What is worse: greedy corporations or lazy consumers?

How often do we pay for things we don’t need because we don’t think to question our long-standing outgoings?

Big companies, especially utilities, telecoms etc rely on consumer and business inertia to generate huge profits. What do I mean by that? Well, it’s simply the fact that for many people, once they have signed on the dotted line, it is easier to just keep making the monthly payments (especially if they are done via direct debit from their bank account) rather than go through the process of checking for better deals and switching to another service provider.

Even now, when there are numerous websites that will do all the comparisons for you and even handle the process of switching and managing the change to payment details, a lot of people will simply just not do it.

This is one reason why many companies are prepared to offer very generous terms to new customers to get them to sign up for contracts, as they know that customers will often keep on paying the same rate even though, over time, it has become a poor deal. The longer the initial term of the deal, the more likely that customers will stick and not switch

Every regular payment should be scrutinised in the same way that you would check your small change in the local shop.

I’ve just recently reviewed my domain name holdings and online hosting plan and saved my business a significant amount of money which previously trickled out almost unnoticed in a steady stream of outgoings spread over the year.

There are other ways that corporations boost their profits by capitalising on consumer inaction.

Gift-Card

Did you know that gift certificates/cards/tokens purchased from popular outlets for friends and family can boost profits for retailers due to often hidden terms that see the gift cards expire after 12 months? This renders the money spent on them pure profit.

In 2006 it was estimated that the value of unredeemed gift cards was almost US$8 billion. Many people are unaware of this and savvy/unscrupulous (your choice) businesses take advantage of it. Some states in North America (e.g. California, Massachusetts, Ohio, Washington) have enacted laws to eliminate non-use fees or expirations.

Maybe there is an opportunity here to differentiate your business from theirs by advertising gift cards that don’t expire. I’m sure your accountant/CPA will brand that advice as reckless or irresponsible(!) but in practice it won’t make much difference to the percentage of your gift cards that are actually redeemed. If you are not currently offering any form of gift/delayed redemption card they can be very profitable in almost all sectors and you might like to give it some thought.

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3 keys to profitability: cost of goods sold, markup, and margin – support

If you don’t know the expected gross profit margin percentage for your business, don’t you think you should? Join an industry association, or search the Internet for more details about expected profit margins in your industry.

Stan Snyder, CPA and expert bean counter gives Microsoft’s Office site an insight into the technical issues from an accountant’s point of view.

Knowing the average gross profit margin for your industry will help you to compare your business to other businesses in your region and remain competitive. Tracking the changes in your actual gross profit over time will help you to price your products to maximize gross profit and net income.

via 3 keys to profitability: cost of goods sold, markup, and margin – support.

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Managing the Gross Margin of your Ecommerce Business » Practical Ecommerce

The gross margin calculation of sales minus cost of goods sold is a fundamental key performance indicator of any business that sells products. It measures the profit generated from each product you sell. It is something that many small ecommerce merchants overlook when they focus exclusively on revenue growth or volume.

Dale Traxler takes a look at some fundamentals of ecommerce strategy that we would be wise to note.

via Managing the Gross Margin of your Ecommerce Business » Practical Ecommerce.

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Rank by importance – then why for #1 and #3: cost reduction, revenue growth, or margin improvement? – Ask Jeeves

An incomprehensible title(!) but a great conversation between senior industry figures debating which comes first on their list of priorities; increasing revenue, reducing costs or improving margins.

What is your take, which would you put first?

Rank by importance – then why for #1 and #3: cost reduction, revenue growth, or margin improvement? – Ask Jeeves.

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