3 Hacks That Will Save Your Profit Margin

By July 8, 2019 No Comments

1. Remove Unnecessary Expenses

This one is a bit of a straight forward hack but effective nevertheless.

It pays to be frugal especially when you’re just starting out.

Go through your QuickBooks or Xero and work out what you can cut. Maybe you have an unnecessary subscription to an app that you have only used once in the last three months or maybe you have unnecessary manufacturing costs on your product. Maybe you’re ordering to much stock resulting in dead stock or maybe you’re not ordering enough and there is an opportunity to get a discount on the cost price per product.

It pays to be frugal and run as lean as possible.

2. Use a Free Shipping Threshold

Average Order Value is one of the most important metrics in E-commerce. Average Order Value (AOV) tracks the average dollar amount spent each time a customer places an order on your website.

Looking at your profit margins per order instead of per product will give you better insight on how your store is performing.

It will also give your store more flexibility in how your store sells products. For example, when thinking about profit margins per product your focus will be “How do I get the most margin out of this product?

Whereas by focusing on profit per order your focus shifts to “How do I get the most out of my products so customers buy more per shipment?”

That’s where the free shipping threshold comes in.

free shipping threshold

Free Shipping Threshold

Nothing screams “Buy me!” to online shoppers more than these two simple words: Free Shipping.

It’s one of the most enticing offers you can give your customers and it’s the perfect offer to lure customers to spend more.

Free Shipping Thresholds work by offering your customers free shipping on orders that reach a certain amount.

Now you might be asking “If I choose to offer a shipping threshold, what should the minimum purchase be? $25? $50? $100?!”

This is where your Average Order Value comes into the equation. Literally.

Ideally, you should set your free shipping threshold just high enough above your average order value to entice customers to buy one or two extra products to increase the overall value of the order.

This strategy improves your profit margin by;

  • Reducing shipping cost if products can be shipped together
  • Optimising low profit margin products by offering them as “bargaining chips” for free shipping on high margin products
  • Increasing your Average Order Volume
  • Increasing your revenue per order

3.Retention Retention Retention

While acquiring new customers is important, retaining them is the key to e-commerce growth.

Retaining new customers is not only easier than acquiring new customers but cheaper too.

Many E-commerce businesses spend the majority of their marketing efforts on acquiring new customers instead of focusing on the customers they already have.

After all long term customers are far more valuable to your company than a customer who purchases only once.

To add to this point, many e-commerce business owners think once they get the sale the hard work is done when in reality it is only just beginning as you want your customers to become loyal to your brand and advocates.

marketing funnel

Here are some free ways you can market to your existing customers;

  • Email Marketing campaign
  • Engaging with fans on Facebook and Instagram
  • Facebook Groups and forums
  • Content marketing (blogs, videos, podcast etc)

So there you have it 3 hacks that will save your profit margin. The best thing about these hacks is that they can be implemented today to improve your profit margin going forward. So let us know how you went or if you have any other profit margin hacks you would like to share feel free to comment on the post below.


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