Business owners often tell me, “We’ve been busting our tails, and sales are up, but we’re somehow making less money.” It’s maddening, and understandably so. On the surface, everything seems to be heading in the right direction. More sales should mean more money…right?
Unfortunately, this isn’t always a given. In fact, much of the time, increased sales can mask a much deeper problem: falling gross profit margins.
The worst part? Most business owners don’t even realize this is happening until it’s much too late. They’re so focused on boosting their overall revenue that they overlook a much more important factor: profit. If you’re bringing in more money yet keeping very little of it, you’re not improving—you’re treading water.
So, what’s the solution? Address your margins. Once your margins are healthy, every additional sale adds to your bottom line. Until then, more sales could just mean more stress with little or no financial reward. I tell all of my clients to do the following:
1. Increase Your Prices
I already know what you’re thinking: Easier said than done, Wayne.
And I get it. Raising prices is uncomfortable. It feels risky. Most business owners avoid it until rising costs force them to.
But here’s what I’ve found across virtually every industry I’ve worked with: most business owners are undercharging for their goods and services. They’re undervaluing their work, their team, and their product, and that shortchanges everyone—their customers included.
To be clear, raising your prices doesn’t mean taking advantage of people. It means pricing your product so that it reflects its actual value. Your customers aren’t just buying what you sell—they’re buying outcomes, trust, reliability, and peace of mind. When you deliver on that, you deserve to be compensated accordingly.
Now, there’s a right way and a wrong way to raise prices. Just slapping a new number on your invoices without a plan can backfire. Here’s a six-step strategy I recommend to all business owners:
- Decide if raising prices is necessary. Look at your margins and costs. Are you charging enough to grow and sustain your business?
- Clarify your reasons. Maybe your costs have increased. Maybe you’ve added value in some way. Know your why.
- Determine the amount. Be strategic. Small, regular increases are often easier to roll out than rare, more drastic jumps.
- Gauge the impact. Will you lose some price-sensitive customers? Possibly. But focus on your ideal clients—the ones who value what you do.
- Plan the rollout. Timing, messaging, and tone matter. Give plenty of notice, especially to loyal customers.
- Communicate the change. Be confident. Stand behind your value. Most clients won’t blink, especially if you’ve been overdelivering for them.
2. Improve Your Gross Profit Margins
When clients ask, “How do I increase sales?” I always respond with my own question:
“Why?”
Why is it that you want to sell more, exactly? If your margins are thin, selling more might just mean working harder for the same (or even less) money.
Before you go chasing more revenue, look at your gross profit margins. Here are a few ways to improve them:
- Negotiate with vendors. Can you shave just a few percentage points off your costs? That’s pure profit!
- Improve operations. Look for inefficiencies, waste, or overstaffing in your delivery or production processes.
- Upsell and cross-sell. Aim to boost the average value of each transaction (without increasing your costs proportionally).
- Stop discounting unnecessarily. Discounts chip away at your margins fast. Use them strategically (and sparingly).
Improving your gross profit margin is like giving yourself a raise without working more, yet it’s the leverage point many small business owners tend to overlook. If you’re feeling stuck—working longer hours, stressing over cash flow, wondering why your hard work isn’t paying off—don’t just assume you just need to “sell more.”
Instead, take a good look at your current pricing and profit margins. These two areas are the key to any real growth. I’ve seen businesses go from struggling to thriving in months just by making these changes.
Focus on profits before sales. When you do that, every new sale becomes a win rather than a net negative, and that’s how you build a business that actually works for you.