Boost Your Profit per Unit

Profit per Unit = Sales Price - Sales Cost - Production Cost

      Increase
Sales
Price By 5%
Decrease
Sales
Cost By 5%
Decrease
Production
Cost By 5%
Sales Price
Production Cost
Sales, Mktg, G & A
Profit per Unit
Profit per Unit Increase
 $100 
 $ 40 
 $ 30 
 $ 30 
  
 $105 
 $ 40 
 $ 30 
 $ 35 
 17%
 $100 
 $ 40 
 $ 28.5 
 $ 31.5 
 5%
 $100 
 $ 38 
 $ 30 
 $ 32 
 7%

Your Profit per Unit is critical to your success because any change in your Profit Per Unit causes an equal percentage change in the total profits you will ever earn from your product (and your return on investment). Profit per Unit is highly sensitive to changes in Sales Price, Production Cost, and Sales Cost.

  • A 5% increase in Sales Price increases Profit per Unit by 17%
  • A 5% decrease in Sales Cost increases Profit per Unit by 5%
  • A 5% decrease in Production Cost increases Profit per Unit by 7%

Improvements in more than one component add together. For instance, a 5% increase in your Sales Price plus a 5% reduction in your Sales Cost and a 5% reduction in your Production Cost produces a 29% increases your Profit per Unit (and the total life time profits from your product)!

To maximize your profit per unit you must make independent effort to do the following:

1. Boost Your Sales Price

Higher Sales Price

Customers will often pay as much as 20% more for a 20% higher performance product. They will usually pay 4% more. We maximize your sales price by boosting the performance of your electronic product.

Customers will pay a substantial premium for a product with 10% more functionality. They will usually pay a premium of at least 2%. We maximize your sales price by boosting the functionality of your electronic products.

The most reliable product in a market segment usually sells for a 20% premium over less reliable products with identical performance and functionality. It would be surprising if a totally reliable product could not command a 4% price premium. We maximize your sales price by enabling you to make your electronic product totally reliable.

As technology advances the price of an electronic product usually falls rapidly with time, typically 2% per month. If you get your product to market 2 months earlier you can obtain a 4% higher sales price. We maximize your sales price by slashing your time to market.

Combining all of these small increases together, you may be able to boost the sales price of your product by 14%.

2. Reduce Your Production Cost

Memory is a substantial part of the production cost of many electronic products. We can slash your Production Cost by reducing the amount of memory that your electronic product uses by 10%.

The cost of the microprocessor is a significant part of the production cost of many electronic products. If your software runs faster you can switch to a 10% lower performance, 10% lower cost microprocessor, reducing your production cost. We can reduce your production cost by boosting the performance of your software.

A 10% reduction in CPU and memory cost can reduce the cost of an electronic product by 2% of its sales price.

Our Production Cost Reduction Service experts use the advanced production cost reduction capabilities of our products to slash your production cost to the minimum.

Combining all of these small cost reductions, you may be able to cut the cost of manufacturing your product by 4%..

3. Reduce Your Sales Cost

We provide a comprehensive range of products and services that reduce the sales cost of your electronic product.

Your sales cost is drastically reduced when customers just call up and buy more of your product. For repeat sales there are no marketing costs, no expensive sales calls, no introductory discounts, and no sales commissions. Many products would never be profitable except for repeat sales. Crashes, lock ups, glitches, bugs and viruses are the surest way to discourage repeat sales of your product. We slash your sales costs by maximizing your product's reliability by preventing bugs, viruses, glitches, crashes & lockups.

Your sales costs are reduced when your product has exceptional performance that puts it ahead of the competition. We reduce your sales costs by maximizing the performance of your product.

Your sales costs are reduced when your product offers more advanced capabilities than your competition. We reduce your sales costs by maximizing the functionality of your product.

For example, assume that an electronic product has an original sales price of $100. If we combine a 14% higher sales price, or $14, with a 4% lower production cost, or $4, the product's profit per unit increases by at least $18. If its profit per unit was originally 30%, or $30, the accumulation of these small improvements in performance, reliability, time to market, functionality, and production cost increase the product's profit per unit (and the total profits it will ever produce) by 60%!

© 1996-2017 Green Hills Software Trademark & Patent Notice