This article is an excerpt from the Shortform book guide to "Fix This Next" by Mike Michalowicz. Shortform has the world's best summaries and analyses of books you should be reading.
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Can you learn how to sell more products? How can you make more money through sales?
To sell more products, you need to know how to attract and keep the right customers. Additionally, understanding how to increase sales margins on each product will help you to increase your earnings.
Read on to learn how to make more money in sales.
How to Increase Sales Revenue
When thinking about how to sell more products, you should think about both increasing frequency (the number of products you sell) and sales margins (the amount of money you earn per sale). Earning more money per product and selling more products increases revenue, making your company more profitable, sustainable, and prosperous.
To increase margins, charge four times the material and production cost of your products. These higher prices imply better-quality products, attracting customers. To increase sales frequency, embrace a specific area of your industry and expand your offerings within that niche. Specialization encourages customers to buy more products because they trust you to meet their needs within that niche.
For example, say you sell graduation caps and gowns. When you increase your prices, you attract more customers who want high-quality products. You also start selling graduation cards and diploma frames, becoming popular as a one-stop shop for graduates and their families.
| Other Methods to Increase Sales Margins and Frequency In The Personal MBA, Josh Kaufman offers an alternative formula for price-setting: price = material and production costs + desired profit percentage. For example, if the cost was $10 and you wanted to make 40% profit, you’d set the price to $14 (as opposed to $40). Why would you use a formula that produces lower prices and therefore smaller margin increases? The answer arguably lies in the variable profit margins in different industries. For example, restaurants often have a 3%-5% profit margin. Raising prices too far beyond your industry’s average could drive customers away, instead of attracting them by implying high quality—so, Kaufman’s formula may work in this case. When it comes to increasing the number of products you sell, other experts recommend marketing additional products based on customers’ past purchases. For example, say you run a pet store and a customer bought a dog bed from you. You may then market dog toys and leashes to that customer, as their previous purchase shows they’ll likely be interested. This is similar to the specialization suggestion—you encourage the customer to trust you to once again meet their needs within a specific niche (in this case, dog supplies) since you did so before. |
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Here's what you'll find in our full Fix This Next summary:
- Why many entrepreneurs struggle to fulfill their companies' requirements
- How to use the Business Hierarchy of Needs to prioritize company problems
- How to get to root problems rather than applying Band-Aid solutions
