HOW DOES $1 in SAVINGS = $20 in SALES?

Increasing your company’s revenue in a difficult economy can be tough. Getting a price increase from your customers may, in the end, hurt you and your customer.

But you can control your costs, at least to some degree. The example below shows what a reduction in cost equals in terms of sales.

Example: If your company revenue was $100 Million and you made $5 Million in profit, you are making five cents (5%) for every one dollar in sales.

At these margins, in order to make another $1 Million dollars in profit, you would need to generate another $20 Million in sales.

OR

You could reduce your cost. If you spent $7,000,000 on freight and you cut that cost by 15% that would be the equivalent of a $20,000,000 sales increase.

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