The Discount Machine's big brother
The Four Levers
There are four ways to increase profit: charge more money, sell more product, cut supplier costs, or run a leaner business. Most people know the list. Few know how the four relate, or which one is doing the real work. Drag the levers and find out.
Start with a business
Profit today: £100,000 (10.0% net)
Profit becomes
£100,000
no change
| Revenue | £1,000,000 |
| Cost of sales | £600,000 |
| Gross profit | £400,000 |
| Overheads | £300,000 |
| Net profit | £100,000 |
Each lever on its own, 5% in your favour
Why price wins
A price rise goes straight to the profit line: nothing else moves. Extra volume arrives with its costs attached; you have to make, ship and support every extra unit before you keep any of it. Cutting cost of sales helps, but only on the slice of revenue it touches. Overheads are the smallest lever because in most businesses they're the smallest number. So the lever your sales team reaches for first, discounting, is the most expensive one in the building, and the lever they're most frightened of is the one that pays.
Simplified on purpose: linear, no elasticity, no capacity limits. Real businesses lose some volume when they raise price, which is exactly why the Discount Machine shows you how much you can afford to lose.