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What do you do when the numbers don't add up?

In my last two blog posts here and here , I discussed planning your ideal sales units.

But what do you do if you’ve worked out these numbers and it doesn’t add up? If that’s the situation you are currently in, then read on - this blog will cover how to close your sales gap by increasing your profit per item.

At the end of the article, I’m going to tell you about my free roadmap you can download to walk through the steps to building a profitable business, but for right now, let’s focus on the numbers.

Don’t Panic

You have taken the time to sit down to calculate your ideal sales unit number and your break-even sales units, and they are way off where you are currently.

Now you have something to focus on. If you are nowhere near where you need to be, don’t panic. So much of being an entrepreneur is about persistence. Keep going and you will get there, even if you are taking small steps each time.

In this article, I’m going to focus on one step you can take to get you closer - grow your profit per item.

Profit Per Item Makes A Big Difference To Unit Sales

For every item that you sell in your business, you need to make sure that it is making as much progress towards your overall profitability goal as possible.

If you grow your profit per item, you simply won’t need to make as many unit sales in order to reach your goals for the business.

As I referred to in my article on the two numbers that you need to know for your business here, your sales units are based on your overall costs divided by your profit per item.

So monthly costs of £1000, divided by an average profit per item of £10 will mean that you have to sell 100 items per month to break even.

But if you increase your profit per item to £12, you only need to sell 1000/12 = 83 units per month to break even.

Before you start putting a lot of money behind marketing to drive your unit sales, it’s worth taking the time to look at your profit per item to see if it can be improved.

Profit Per Item Makes A Big Difference To Unit Sales

For more information about calculating your margin - take a look at my blog article here. Are there any ways that you can improve the margins on your product without impacting the customer? Are you using packaging that is unnecessarily expensive? Are there other suppliers that you could go to to source any of your materials?

Always put the customer first - never make changes that is going to have an impact on their perception or enjoyment of your product.

Consider Your Selling Price - But Be Careful

In my blog post here I talk in a lot more detail about how to price your products. I would never suggest raising prices simply to grow your profit per item, but do make sure you have done your homework and that you are not undercharging for your products.

Are there other ways to increase the average retail price that you are charging for your products? For example, can you create bundles of products - putting together lower priced items so that each customer transaction is generating more money?

These Small Steps Can Help Close That Gap

What I’ve outlined above - reviewing your profit per item and checking if it can be improved - is one step towards reaching your sales goal.

Please share your thoughts - I’d love to know what you’ve tried for your business and how it’s worked out for you.

Other Ways I Can Help

If you want a straight-forward set of steps to build your retail business - download my free roadmap “Retail Entrepreneur’s Roadmap to Profit” right here.

And don’t forget to join the discussion inside the Female Founders In Retail Facebook group where you can meet other women building amazing product-based businesses. If you’re not already in the group, click here to request to be let in. See you in there!

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