COST ENGINEERING — by Ray Costello

The Hidden Profit in Your Trash: Why Your Gross Profit is Bleeding Out

If you are running a business on a 10% net margin, every €1 you waste in costs requires you to generate €10 in new sales just to break even.

Most business owners are obsessed with 'Top Line' revenue. But if you are running on a 10% net margin, every €1 you waste requires €10 in new sales just to break even.

The Margin Pricing Trap

90% of businesses fail the math test on margin. Most multiply cost by 1.35 to get 35% margin. That only gives you a 26% margin. You must use the inverse.

The Fix: The Supplier Audit

Ask for discounts every time you place an order. If they raise prices, get competitor quotes. Confront increases immediately.

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