Are you sacrificing sales mix for sales?

POWER TIPS SERIES

Power Tip 3 – Are you sacrificing sales mix for sales?

If you have not read Power Tip 1, go here for it on RevPAR VS Average Daily Rate focus or Power Tip 2 here for Buffet Spreads – bundling food and beverage items for higher profits.

Balanced Sales Mix

Balanced Sales Mix

Your profitability is enhanced not by your Sales but from your Sales Mix. So, what is the difference?

Sales is about the number of products on offer. Sales Mix is about the combinations of products on offer. Sales deals with absolute quantity sold. Sales mix deals with proportion of each product compared to total.

Proportion and Quantity
Why are proportion and quantity such a big deal?
Combinations are where the sales mix magic happens. Each combination of price, cost and contribution margin for the items forming part of the sales mix is what brings in the profit element.

Contribution Margin – path to profit
Put simply, contribution margin is selling price less variable expenses. This is different for different items being sold. However, the unique combination of high contribution margin items in the sales mix is what boosts the bottom line.

Pay attention to what each item in the sales mix contributes to profitability. It is more important than simply the number of items sold.

Watch out for Power Tip 4 in the Power Tips Series.

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About S Lakshmi Narasimhan

I am the Founder of Ignite Insight LLC a New York City based consultancy, which specializes in Group Executive Training, Coaching and Consulting. I coach, train hotel non-financial managers how to optimize profits in the operation. I run my own online financial academy called Cloud Academy – Master Numbers without a Degree. Visit http://www.elearningcloudacademy.com for details on the courses that are offered. These courses are self-paced, easy to understand in an inter-active, blended learning environment. I teach Hospitality Finance Graduate class and Financial Management Under Graduate class during the Spring and Fall semestes as an Adjunct Faculty member at the New York University, Tisch Center for Hospitality, and Tourism in the School for Professional Studies.
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