Increase Average Sale Amount

By Steve Gillman

Perhaps the easiest way to increase profits in a business without finding new customers, is to increase the average sale amount. This is why they ask you at every fast-food restaurant, "Would you like fries or something to drink with that?" You can even sell additional product at lower profit margins. For example, in a restaurant setting, after a couple declines desert, the waiter could offer two for the price of one. As long as there is still some profit on the items, larger total bills mean bigger profits.

How you apply this principle will depend on the nature of your particular business. In a cleaning business, for example, you might offer to place several deodorizers in key places in a house for $10 extra. With automobiles the extras that are added to a sale (upgraded stereos, rustproofing, etc.) often provide the bulk of the profit.

Of course one way to increase the average sale amount is to raise the price. This can backfire, of course, if total sales go down because of resistance to the new pricing. If you are going to try increasing prices, research what your competition is charging, and read the page on how to increase perceived value.

While in general you make more money when each customer spends more, there are two things to watch for in applying this strategy. The first is profit margins. You have to be sure that you make a profit on the additional amount spent. It won't help you to move your average sale from $5 to $6 if the ways you do it move your average cost from $3 to $4. In other words, don't give away too much just to boost revenue--look to make a profit on each additional dollar.

Also, there are times when it may appear that you are boosting the total sale, yet all you are doing is giving away some of your profits. Notice that in the example of the two-for-one deserts at a restaurant the special is offered after the diners turn down desert. Why? Because if they intended to order two deserts anyhow and you gave them one for free, you just cut your profit margin. In other words, be sure that the thins you do are really increase the average sale amount. Designing your efforts appropriately is a start,but tracking the results is important too. If you don't already know the dollar amount of your average sale, find out. Then start tracking it as you try to boost it.

If you look at the customers you have right now, and ask the question, "How can I get them to spend more on each visit," you'll probably find some ways to increase the average sale. Check out the page Sell Complementary Products for another specific way to make more from each sale.

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