If you're building a mission-driven business, there's one particular number you definitely need to check. Understanding this number will quickly pinpoint any issues in your business and determine if you're building a sustainable, profitable venture.
In this episode of Her CEO Journey, we demystify the significance of this essential metric for business vitality: Gross Margin.
Join our host Christina Sjahli as she unveils the power of this metric, teaches you how to calculate it in minutes, and explains what it tells you about your pricing, costs, and overall financial sustainability.
Access the path to informed decision-making and build a thriving business that resonates with your purpose!
Listen and move from panic to power.
Key Takeaways:
- Gross Margin Explained: It's a profitability indicator representing revenue minus the direct cost of delivering your service or product.
- Calculating Gross Margin Percentage: Revenue minus Cost of Goods Sold divided by Revenue.
- Interpreting Your Gross Margin:
- Below 30%: Potential issues with pricing or cost of goods sold (too high or too low).
- Too High Cost of Goods Sold: May indicate missing costs or unadjusted pricing.
- Too Low Cost of Goods Sold: May indicate incorrect pricing not reflecting all costs.
- Resources for Further Exploration:
- Listen to our Pricing Series (Episodes 160-163) on Her CEO Journey
- Profit Reimagined's Fractional CFO Services
Profit Reimagined CFO services can be a game-changer when it comes to understanding and optimizing your gross margin and pricing strategy.
A fractional CFO brings deep financial expertise to the table by analyzing your financial data to pinpoint areas where your cost of goods or services sold might be inflated or where your pricing might not be fully capturing your value.
Having a fractional CFO will help you develop strategies to streamline your operations, negotiate better deals with suppliers, and implement data-driven pricing models that ensure you're covering your costs and generating healthy profits.
Episode Highlights:
- [00:54] Introduction to the importance of a single number for business health.
- [01:33] Understanding Gross Margin.
- [02:45] Calculating Gross Margin Percentage and why it is important.
- [03:25] Interpreting Your Gross Margin: What a low percentage tells you.
- [05:20] Resources for further exploration on pricing and financial solutions.
Resources:
- Connect with Christina Sjahli on LinkedIn
- Check out Profit Reimagined's Fractional CFO Services
- Turn your purpose into profit, visit our Website and LinkedIn
- Discover if our Fractional CFO Services are your perfect fit by taking this quiz.
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