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RED variances indicate your business is doing worse than your industry average
investigate ways to increase prices and decrease costs to boost profits
Remember these are ATO averages, taken primarily from BAS, so use them as a guide, not gospel.
You can also use this checker to assess individual items that you sell
Establish if each one of your products or services are above or below industry average? and/or your business average?
It is especially important to examine the value of continuing to sell items that are making a loss for your business, and lowing your overall profit.
As Price setting seems to still be a “dark art” with most small businesses. More often than not SMEs set their price by sticking their finger in the air and testing wind speed… “What do I think people will pay?” “Will they complain if I raise my price?”… Neither of these approaches is a good reason to LOSE MONEY.
Apart from Clearance Sales, is every sale you make profitable? Are you REALLY sure?
Raising the price on a few products by a few dollars will make a significant difference to your overall profit; especially if those products were previously making a loss.
Use this FREE SME benchmarking tool to examine your products.
Slightly raise the price on your least profitable few, keep checking how the prices compare, and keep raising slightly every few months until you meet the average… If your clients won’t wear the price rises, and you make fewer sales, you may still be more profitable because ZERO profit is better than selling at a loss. For more on this see or recent post
BE HONEST – you are the only one who will see the answers…!
How did you Score?
We recommend you start with any items you feel are not performing well, test them against your averages, and where necessary begin immediate remediation.