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The Low-Margin-High-Volume Business Model Explained
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Is a low margin, high volume model actually smart? Think cheap takeaway. Heaps of customers. Tiny profit per sale. In most cases, that’s a grind. You work harder, manage more people, and often end up with less net profit. Here’s the maths. If your gross margin is 30% and you discount prices by 10%, you need about 50% more sales just to stand still on profit. That’s a huge lift. In many cases, the better move is the opposite. Increase prices until you hit the sweet spot where profit improves with
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Is a low margin, high volume model actually smart? Think cheap takeaway. Heaps of customers. Tiny profit per sale. In most cases, that’s a grind. You work harder, manage more people, and often end up with less net profit. Here’s the maths. If your gross margin is 30% and you discount prices by 10%, you need about 50% more sales just to stand still on profit. That’s a huge lift. In many cases, the better move is the opposite. Increase prices until you hit the sweet spot where profit improves with
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