You might be wondering if you’re doing all you can to improve your profits. Our profit increase calculator will help you work out how much extra profit your business is capable of.
What does the profit increase calculator do?
The profit increase calculator (XLS, 52KB), opens in new window prompts you to enter your existing figures to determine your current net profit based on cash flow and other relevant factors. It then guides you through various performance improvement factors, showing you how minor improvements can impact your profit.
Here are the performance factors.
Number of potential customers
If you reach more customers, you'll generate more sales, and that translates into increased profits. The profit increase calculator allows you to see how much additional profit you can make by improving your reach by a certain percentage
No business has a 100% conversion rate, so there's always room for improvement. The profit increase calculator shows you how much more profit your business could generate if you improved your conversion rate by a given percentage
Number of transactions per customer
As they say, it's cheaper to keep an existing customer than it is to attract a new one. The profit increase calculator allows you to examine how an increase in the number of transactions per customer will increase your profit
Average value of each sale
What if you could boost the average value of each sale by five, ten, or even 30%? Use the profit increase calculator to see the potential results
Net profit percentage
Have you ever wondered what would happen if you could increase your net profit percentage by a few percentage points? The profit increase calculator can answer that question, delivering solid dollar figures based on your existing data.
The profit increase calculator (XLS, 52KB), opens in new window automatically computes the number of paying customers. It also calculates total turnover, and resulting net profit based on the figures you enter. As you enter various improvement factors, pay attention to how the resulting net profit improves compared to your current net profit.
Use the profit increase calculator to your advantage
There's always a risk associated with raising prices, making it smart to look beyond price increases to improve your profits. The profit increase calculator allows you to consider other factors. It also allows you to determine how much of an increase you could expect if you were to follow through with key performance improvements.
You may find that you're leaving a lot on the table or that it would make financial sense to invest in some sales training for your staff. You could also use the profit increase calculator to see how expanding your pool of potential customers might affect your bottom line. Depending on your net profit results, you may be able to justify entering a new market or launching a broader marketing campaign.
How to use the profit increase calculator
Our profit increase calculator is a simple spreadsheet that makes it easy to see how minor improvements can translate into increased profits.
Download the 'profit increase calculator (XLS, 52KB), opens in new window' and open it in Microsoft Excel or another spreadsheet application.
Enter your name in the ‘Prepared By’ field. The date is automatically set to today.
Look at the example on the left to get a better sense of the calculator's purpose and outcome.
Enter your existing sales figures into the ‘Current Performance’ column. This includes the number of potential customers, your existing conversion rate, number of transactions per customer, average value of each sale, and net profit percentage.
Next, enter your improvement factor for each of the following:
- number of potential customers
- conversion rate
- number of transactions per customer
- average value of each sale
- net profit percentage.
Experiment with different improvement factors to see their potential improvement on your profit. To isolate one improvement factor at a time, enter '0' in the other improvement factors. Consider using the profit increase calculator in conjunction with your marketing plan to ensure that your marketing investments make the most sense. Will they:
- increase the number of potential customers?
- improve conversions, and thus the number of actual paying customers?
- help increase the number of transactions per customer?
- increase the average value of each sale?
- help boost your net profit?
Use our profit increase calculator to test different ways you could improve profit in your business.
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The information contained in this article is correct as of July 2018 and is intended to be of a general nature only. It has been prepared without taking into account any person’s objectives, financial situation or needs. Before acting on this information, NAB recommends that you consider whether it is appropriate for your circumstances. NAB recommends that you seek independent legal, financial, and taxation advice before acting on any information in this article.