Use meaningful segments
Analyse profitability at the level where decisions are made: product, service, branch, project or customer. Segmentation reveals differences hidden in total sales and helps direct useful questions to commercial and operational teams.
Understand cost before changing price
Distinguish direct and shared costs, using allocation methods that can be explained. A high sales margin may be offset by intensive support or long collection periods. A complete assessment considers service costs and the capital tied up in delivery.
Turn findings into decisions
Findings may support changes to sales mix, service design or procurement. Test proposals against demand and operational capacity before wider implementation, then review actual results against the original assumptions.
This article provides general educational information. Appropriate decisions depend on each organisation’s circumstances and data.