In Government contracting, profitability is not a dirty word. Profitability is the reward that comes from correctly executing the balancing act of matching sales and costs. We find that many Government contractors who are interested in increasing profitability only focus on the cost side of the equation. For Strategic Pricing® to return a win and meaningful profitability, a successful margin improvement focus is multi-faceted. It involves the product or service being delivered, the methods of delivery, production activity, management structure, and effectiveness, plus other factors.
Cost Analysis
Most of the time, costs are a factor. Cost may be too high or the company is not focused on generally good business practice. Perhaps you are doubling up on some costs where some do not need to be spent. Maybe you are just not delving into what some costs are and are merely “paying the bills”. Oftentimes, you may be pursuing the type of revenue-generating business which is just not profitable – the money you are charging is just not enough to cover your costs.
Review All Aspects
Look at revenue too as means of dissecting what composes your profit margin. Think Strategic Pricing® so that you can improve your profitability by planning your bids to address profit as just one of the key ingredients in all the decisions you will make. Perhaps your management structure is top-heavy, or your production activity has some slack periods. Maybe your delivery methods are just costing too much and are not time efficient. It could be that your facilities are too much for what has changed in your business.
Your Strategic Pricing® may be inconsistent with the times. If your pricing methodology is just that you slap together some costs and call it your price, then you would be out of step with the current climate. We find there are many critical steps to realizing more profits in less time. Most of our clients come to us asking the same question -. How do we make more money? By examining all the tools and processes involved in Strategic Pricing® and using a critical eye on all aspects of your pricing, you can discover the keys to the right price and not compromise your profitability.
For more on this subject see this article https://www.propricer.com/blog/what-should-my-profit-be-for-a-contract
