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Profit improvement: where to look first

A practical order of investigation when margins are drifting, starting with mix and pricing before cost cutting.

Start with mix, not cuts

Margin pressure is often a mix problem rather than a cost problem. Before reducing spend, separate revenue by product, service line or site and look at contribution rather than turnover. The largest revenue line is frequently not the largest profit contributor.

Test pricing deliberately

Small pricing corrections applied consistently usually move profit further than broad cost reduction, and they can be tested on a limited scope before wider rollout.

Then address structural cost

Once mix and pricing are understood, cost work can be targeted at the lines that genuinely constrain the business rather than trimming across the board.

This article is general information about our approach and is not advice for a specific business. Outcomes depend on individual circumstances.

Next step

Apply this to your business.

Speak with Asif Piracha FCCA about profitability, structure, reporting or international operations.