Product Mix – It’s Like A Price Increase Without Increasing Your Prices
Let me say right up front (and if you’re at all familiar with my work you will already know this), I am a huge fan of price increases.
In my experience (and those of thousands of business owners) price increases are not a problem for your customers if they are done right. They are a surefire way to increase your gross profit – and that means more money for you and your Dream Lifestyle.
But did you know that increasing your prices isn’t the ONLY way to increase your gross profit?
Your product mix can be just as powerful and just as useful for creating the financial results you want from your business.
In fact, in many cases it can be even more powerful than a price increase.
Your product mix is the distribution of your overall sales among your various products and services.
For example, suppose you sell a low price product or service (with a low margin) as an ‘entry’ point for your customers. If you don’t have a good process to ensure your other products and services (with higher margins) get offered to your customers, your overall gross profit is going to be much, much, much lower than it needs to be.
You can dramatically increase your gross profit by weighting your product mix more toward your higher margin products and services after your customers have bought your ‘entry’ product.
By making sure you have a process in place to offer them the those additional products. And that your process clearly demonstrates the benefit and value of those additional items to your customer (you can’t just flog junk – it has to have value for your customer).
In most businesses the effect of properly managing your product mix can generate improvements in excess of those you would get from price increases.
I’m not saying that you shouldn’t increase your prices. You should.
But you also can’t afford to ignore your product mix either.