maximize profits 022010
TRANSCRIPT
Performance – the Key to Success
SSPPAASSPPAASSPPAA
Sales Performance Associates
Maximizing ProfitsDeveloped by Bill VanSickle
and Robin Bryer
Copyright © Sales Performance Associates 2009 www.SalesPerformanceAssociates.com 214-641-9336 800-873-SELL
2
Product CostOverheadSales VolumeSales Price
If we decrease or increase
each of these things by
10%, which one will have
the Greatest Impact as a
means of Increasing
Profits?
3
Base Scenario
Sales$1,000,000
Product Cost
350,000Labor
150,000
Commission
80,000Gross Profit $
420,000
Overhead
360,000
Net Profit $
60,000
2.0 Mark-up on Product
& Labor
8% Commission
$360,000 Overhead
Decrease Product Cost 10%
Decrease Overhead 10%Increase Sales Volume
10%Increase Sales Price 10%
Which factor will have the Greatest Impact on Increasing Profits?
Copyright © Sales Performance Associates 2009 www.SalesPerformanceAssociates.com 214-641-9336 800-873-SELL
Net Profit $ 60,000
Sales $1,000,000 Product Costs 350,000
Labor Costs 150,000 Commissions 80,000
Gross Profit $ 420,000 Overhead 360,000
1,000,000 315,000 150,000 80,000 455,000
360,000
95,000
Base Scenario
DecreaseCost
DecreaseOverhea
d
IncreaseVolume
IncreasePrice
Decreasing Product Cost by 10%
Copyright © Sales Performance Associates 2009 www.SalesPerformanceAssociates.com 214-641-9336 800-873-SELL
Net Profit $ 60,000
Sales $1,000,000 Product Costs 350,000
Labor Costs 150,000 Commissions 80,000
Gross Profit $ 420,000 Overhead 360,000
Base Scenario
IncreaseVolume
IncreasePrice
DecreaseCost
DecreaseOverhea
d1,000,000
324,000
96,000
350,000 150,000 80,000 420,000
1,000,000 315,000 150,000 80,000 455,000
360,000
95,000
Decreasing Overhead by 10%
Copyright © Sales Performance Associates 2009 www.SalesPerformanceAssociates.com 214-641-9336 800-873-SELL
Increasing Sales Volume by 10%
Net Profit $ 60,000
Sales $1,000,000 Product Costs 350,000
Labor Costs 150,000 Commissions 80,000
Gross Profit $ 420,000 Overhead 360,000
1,100,000
360,000
102,000
385,000
462,000
165,000 88,000
Base Scenario
IncreaseVolume
IncreasePrice
DecreaseCost
DecreaseOverhea
d1,000,000
324,000
96,000
350,000 150,000 80,000 420,000
1,000,000 315,000 150,000 80,000 455,000
360,000
95,000
Copyright © Sales Performance Associates 2009 www.SalesPerformanceAssociates.com 214-641-9336 800-873-SELL
Increasing Sales Price by 10%Base
Scenario
Net Profit $ 60,000
Sales $1,000,000 Product Costs 350,000
Labor Costs 150,000 Commissions 80,000
Gross Profit $ 420,000 Overhead 360,000
IncreaseVolume
IncreasePrice
1,100,000
360,000
152,000
350,000 150,000 88,000 512,000
1,100,000
360,000
102,000
385,000
462,000
165,000 88,000
DecreaseCost
DecreaseOverhea
d1,000,000
324,000
96,000
350,000 150,000 80,000 420,000
1,000,000 315,000 150,000 80,000 455,000
360,000
95,000
Copyright © Sales Performance Associates 2009 www.SalesPerformanceAssociates.com 214-641-9336 800-873-SELL
Increasing Sales Price by 10%
Base Scenario
Net Profit $ 60,000
Sales $1,000,000 Product Costs 350,000
Labor Costs 150,000 Commissions 80,000
Gross Profit $ 420,000 Overhead 360,000
IncreaseVolume
1,100,000
360,000
102,000
462,000
IncreasePrice
1,100,000
360,000
130,000
490,000
* Increase Commissions to 10%
385,000 165,000
88,000
350,000 150,000 110,000*
DecreaseCost
DecreaseOverhea
d1,000,000
324,000
96,000
350,000 150,000 80,000 420,000
1,000,000 315,000 150,000 80,000 455,000
360,000
95,000
Copyright © Sales Performance Associates 2009 www.SalesPerformanceAssociates.com 214-641-9336 800-873-SELL
Increasing Sales Price by 5%Base
Scenario
Net Profit $ 60,000
Sales $1,000,000 Product Costs 350,000
Labor Costs 150,000 Commissions 80,000
Gross Profit $ 420,000 Overhead 360,000
IncreaseVolume
IncreasePrice
1,050,000
360,000
106,000
350,000 150,000 84,000
466,000
1,100,000
360,000
102,000
385,000
462,000
165,000 88,000
DecreaseCost
DecreaseOverhea
d1,000,000
324,000
96,000
350,000 150,000 80,000 420,000
1,000,000 315,000 150,000 80,000 455,000
360,000
95,000
Copyright © Sales Performance Associates 2009 www.SalesPerformanceAssociates.com 214-641-9336 800-873-SELL
All I need to get
this deal is a 5%
discount!
How can I raise my prices when . . .
What’s the Real Impact of a 5% Discount
Copyright © Sales Performance Associates 2009 www.SalesPerformanceAssociates.com 214-641-9336 800-873-SELL
The Real Impact of Discounting
Base Scenario
Net Profit $ 60,000
Sales $1,000,000 Product Costs 350,000
Labor Costs 150,000 Commissions 80,000
Gross Profit $ 420,000 Overhead 360,000
Decrease Price 5%
350,000 150,000 76,000
360,000
$ 14,000
950,000 5% discount equals a
76.7% reduction in Net Profits374,000
Copyright © Sales Performance Associates 2009 www.SalesPerformanceAssociates.com 214-641-9336 800-873-SELL
The Real Impact of Discounting
Base Scenario
Net Profit $ 60,000
Sales $1,000,000 Product Costs 350,000
Labor Costs 150,000 Commissions 80,000
Gross Profit $ 420,000 Overhead 360,000
Decrease Price 5%
360,000
$ 14,000
950,000 5% discount equals a
76.7% reduction in Net Profits374,000
Even selling at the base price you make $46,000 more than you would by discounting 5%
350,000 150,000 76,000
Copyright © Sales Performance Associates 2009 www.SalesPerformanceAssociates.com 214-641-9336 800-873-SELL
Comparison: Discounting vs. Increasing Price
Base Scenario
Net Profit $ 60,000
Sales $1,000,000 Product Costs 350,000
Labor Costs 150,000 Commissions 80,000
Gross Profit $ 420,000 Overhead 360,000
Increase Price 10%*
1,100,000
490,000 360,000
130,000
350,000
110,000*
IncreasePrice 5%
1,050,000
466,000 360,000
106,000
350,000 150,000
* 10% Price Increase with 10% Commission
84,000
Discount Price 5%
350,000 150,000 76,000 360,000
14,000
950,000
374,000
150,000
Copyright © Sales Performance Associates 2009 www.SalesPerformanceAssociates.com 214-641-9336 800-873-SELL
Need for Formal Sales Training
Higher Price than Your Competitors
Decade of Salespeople
Sell at Higher Margins
How Do You Get There?
14
Copyright © Sales Performance Associates 2009 www.SalesPerformanceAssociates.com 214-641-9336 800-873-SELL
Comparison: Discounting vs. Increasing Price
Base Scenario
Net Profit $ 60,000
Sales $1,000,000 Product Costs 350,000
Labor Costs 150,000 Commissions 80,000
Gross Profit $ 420,000 Overhead 360,000
Increase Price 10%*
1,100,000
490,000 360,000
130,000
350,000
110,000*
IncreasePrice 5%
1,050,000
466,000 360,000
106,000
350,000 150,000
* 10% Price Increase with 10% Commission
84,000
Discount Price 5%
350,000 150,000 76,000 360,000
14,000
950,000
374,000
150,000
Performance – the Key to Success
SSPPAASSPPAASSPPAA
Contact us today
Let’s work together to increase your profit margins and stop discounting
Sales Performance Associates
Dallas: Scott Espy [email protected]; 214-641-9336Denver: Bill VanSickle [email protected]; 800-873-SELL
www.SalesPerformanceAssociates.com