What’s it gonna cost you?
Selling your products and services for more than you pay for them sounds like a no-brainer, but do you really know what your costs are when you’re making your bids?
I learned early on that the key to profitability wasn’t in selling the most widgets. It was understanding and controlling the cost of each widget I sold. Don Farmer, former owner of Farmer’s Tractor and Equipment in Porterville, CA and my grandfather’s boss, friend, and mentor, made it a point to know exactly how much it cost him to unlock the front doors every morning. He understood how much it cost to operate everyday and could then set his pricing and sales goals into action.
Make it a point to know or have someone in your company know what the costs are on a per item basis. How else would you expect to bid properly. Pay particular attention to the un-inventoried or useable items as well as intangeables such as electricity and office supplies. The bottom line is to sell it for more than it costs.
You aren’t alone if you have broken this rule. The U.S. Treasury department estimates that it currently costs 1.4 cents to produce each penny. Put the kibosh to money burn now, and you can increase your profits on every widget you sell.
