How to Make your Product Mix More Profitable
So you’re looking for ways to make your product line more profitable. Perhaps you want to grow your business by introducing a new product line or perhaps you want to look for hidden opportunities that you’ve already got. This exercise will help you identify where you’ve got an opportunity to make your product offering more profitable.
Take your top 3 best sellers - if you don’t know what these are go to your finance sheet or your online shop stats and work it out. I’ve also got a handy post on how to review your business each month so that you can easily keep track of these golden nuggets of info.
Take your three best-sellers and go through these 5 questions to figure out how you can make your product offering more profitable.
5 questions to ask for making your product offering more profitable
Is the price still profitable or does it need to increase?
This is the first point of call before you consider introducing any new products or changes. If you haven’t put your prices up within the last year or you’re struggling to keep up with orders, put those prices up.
If your prices need to increase, do it now! Even if it’s just a 5% increase it will all help towards improving the profit you generate in your business. Make sure you’re happy with the profit margin on all of your products, not just your best sellers. If you need some help with figuring out your pricing check out my free pricing and money planning workbook.
What is it about your product that makes it sell so well?
Is it solving a problem for your audience? Is it the design, is it the fact that you can personalise it? Work that out, ask you audience if you’re struggling, and then think about how can you apply those best-selling reasons to other products?
How is your product eco-system looking?
Take a look at your product range, can you introduce products at varying price points to appeal to a wider range of people?
For your three best-sellers, ask yourself:
- What version of this product can I sell at triple the cost? For example if your best seller is an embroidered scatter cushion that you sell at £35, could you make a floor cushion in a similar design with a bigger profit margin for £105
- What could you sell at 10 times the cost? If your best seller is the embroidered cushion that sells for £35, perhaps you could teach an embroidery class to 6 people at £60 per person =£350
- Now, take the same bestseller and work out what you could sell for half of the price, perhaps you could sell a DIY kit or an ebook on how to embroider one of your designs.
Thinking creatively is the key to this exercise as well as considering what other income streams you could add to your business. It doesn’t need to be a case of literally making the same product but bigger or smaller, you can also introduce new income streams to your business.
What can you ditch?
Ever heard of a not-to-do list? Think about which products or services you need to ditch. Go back to your numbers, which products are least profitable or really draining to create? Simply by not producing products that don't have a healthy profit margin or aren't feeding your creativity will free up some of your time to work on producing more efficient products.
What do you need to create?
The questions above may have unveiled or created some new product ideas. Perhaps you're thinking of introducing a new income stream or product line. Create a shortlist of new product ideas.
[OVER TO YOU]
- With your top 3 best sellers in mind, go through the exercise in this post
- Create a shortlist of new products and a list of products you might want to discontinue
- Make a plan for launching your new product range or income stream
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