3 | Healthy Profit Margins

Profit margins are like the foundations of your business so it’s very important you pay close attention to them and that you’re fully aware of how much money you’re making every time you make a sale. In this episode, I go over how to breakdown your costs and how to use those figures to become a more profitable and resilient retailer. We’ll cover the simple calculations (which I've included below) that’ll give you a clearer picture of how your business is operating and discuss the importance of questioning and challenging yourself to make your products more profitable without harming the essential essence of your offering. I also cover blindspots and common mistakes that business both big and small make which hurt product profitability, the importance of valuing your time in regards to scalability and discuss how harnessing opportunities created through shipping and sales channels can help you keep more of your hard-earned money. Profit Margin Calculations:    Calculating a profit margin - non-VAT registered business (Selling price - product costs)/Selling price   Product sells for £20, costs £8 to make, profit margin (£20-£8)/£20 = 12/20 x 100 = 60%   Calculating a profit margin - non-VAT registered business ((Selling price/1.2) - product costs)/(Selling price/1.2)   Product sells for £60, costs £18 to make, profit margin ((£60/1.2)-£18)/(£60/1.2) = (£50-£18)/£50 = 32/50x 100 = 64%