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This heavily depends on the industry you're in. In software, yes this may be true, but in low margin industries it's absolutely not. The maths is simple. If my
by fphhotchips 6y ago
This heavily depends on the industry you're in. In software, yes this may be true, but in low margin industries it's absolutely not.
The maths is simple. If my margin is 1%, and you make me an extra $100, I keep a buck. If you save me $100, I keep that whole $100. If I'm smart, I can use that to drive my prices down, and take more market share without reducing my margin.
Obviously it becomes less clear if your margin is >20% or so.
- hvidgaard 6y agoIf it's a high margin market, you should absolutely focus on capturing more revenue, it gives you more available capital to work with. Once that slows down or you get competition, you can focus on improving your efficiency.