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The Profit Margin of an Organization Can Be Increased by Either Cutting Costs or Adding Value and Increasing the Price of a Product or Service.

In: Business and Management

Submitted By JJohn
Words 402
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The profit margin of an organization can be increased by either cutting costs or adding value and increasing the price of a product or service.

The profit margin means the amount by which revenue from sales exceeds cost in a business. The profit margin of an organization can be increased b either cutting cost or adding value and increasing the price of a product or service as if the price does cheaper the more customers who will be able to afford the product equalling more units sold and more profit will be earned from the extra units sold. Secondly if the organization decides to make the product more expensive, then the people who are looking to buy the product will have to pay extra earning the organization more than what they would have had from the original price. Finally if the organization add value to their product it will make it unique from the market meaning the can add extra price to the product because others doesn't exist like this. This will also get the customers to be interested in the product because of it is unique so they will be willing to pay the extra cost towards it.
However the profit margin of an organisation cannot be increased by cutting cost, adding value and increasing the products price because the current customers may not be able to pay from the extra cash, making less people to buy it costing the organization to lose money. Secondly adding value means that the organization will have to pay extra to make the product from the original product price. So if enough people don’t buy the product the company will lose profit for paying extra to make the product. Finally if the product is made less expensive and enough customers don’t buy the product then again the will lose the profit from the original set price.
I believe that the profit margin of an organisation cannot be increased by cutting cost, adding value and increasing the…...

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