You think dropping prices 10% loses you 10% profit. Dangerously wrong. The real number will shock you.



Your profit margins don't work linearly. Your revenue growth math is more brutal than you realize.

Here's the formula that permanently changes how business owners think about pricing:

Required Volume Increase = Price Decrease ÷ (Original Margin - Price Decrease)

A remodeler with 35% gross margin drops prices 10% to win more bids.

Required volume increase = 10% ÷ (35% - 10%) = 40%

To maintain the same gross profit dollars, he needs to increase volume by 40%. That's 40% more jobs. 40% more crews. 40% more callbacks. 40% more headaches.

Can he actually achieve 40% more volume? Even if he could, what would that do to quality? Customer experience? His own sanity?

Your business efficiency collapses under that volume. Your financial performance deteriorates from the operational stress.

Most business owners never run this calculation. They drop prices thinking "I'll make it up on volume" without understanding the mathematical reality.

At 35% margin, a 10% price cut requires 40% more volume. At 30% margin, a 10% price cut requires 50% more volume. At 20% margin, a 10% price cut requires 100% more volume-you need to DOUBLE your business just to break even.

The lower your starting margin, the more devastating price cuts become.

Your profitability strategies must protect margins first. Your earnings improvement comes from raising prices, not lowering them.

Stop making decisions based on feelings. Start making them based on math.

Business Owners hire Next Step CFO to double and triple their profit using business and financial strategies that their competition isn't doing.