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It depends... Although focusing on growing revenue is psychologically more comforting, economically saving on expenses is more beneficial. When you save 1 dol

It depends... Although focusing on growing revenue is psychologically more comforting, economically saving on expenses is more beneficial. When you save 1 dollar, your profit increases by 1 dollar. When you sell 1 more dollar, your profit increases by 0.1-0.9 dollars (depending on your margins). To put it differently, if a client is a mature company that is growing 3% annually and which gross margin is 10%, probably saving expenses is a better value proposition. If a client is growing 100% annually and has gross margin of 90%, then, obviously, increasing revenue would be perceived a better value by the client.

raverbashing 14y ago
Yes, but Savings are naturally limited, growth is potentially unlimited Let's say your company sells a product and it costs $10 to make it. You can go and maybe make it cost $9 to make it, but not much less. So you improved their profit by $1 (hopefully) Instead, if you can make it sell 10x more product (which could be feasible), hence having a better effect than savings.
- daemon13 14y ago
  Let me put my finance hat on :-) >> Savings are naturally limited, growth is potentially unlimited That's in theory - check annual revenue growth rates of most big companies in mature [developed] markets - if you increase it from 3% to 5% you are hero. >> Let's say your company sells a product and it costs $10 to make it. You can go and maybe make it cost $9 to make it, but not much less. So you improved their profit by $1 (hopefully) If you reduce cost or expenses by $1, you improved profit by $1. There is no hopefully, this is how things work. Also, most of the savings are in operating expenses, not in cost of goods sold. >> Instead, if you can make it sell 10x more product (which could be feasible), hence having a better effect than savings. Exactly as I said, it depends on the company. Probably, you are using a start-up as an example, which is another Google, which annual revenue is growing 150% month-on-month and which margins are 70-80%. I highly doubt how anyone can make it sell 10x more product for a traditional multinational company - FMCG, Farma, Financial Services, etc. Let's be kind of realistic ;-)
  - raverbashing 14y ago
    Oh sure, sometimes in saturated markets it's easier to increase profits by cutting costs. "There is no hopefully, this is how things work." Of course. But with your new unit cost you may want to cut the sales price of the product, expecting to sell more, or something like that. You may also cut your costs and then it backfires. That's where the 'hopefully' part comes from

raverbashing 14y ago

Yes, but Savings are naturally limited, growth is potentially unlimited Let's say your company sells a product and it costs $10 to make it. You can go and maybe make it cost $9 to make it, but not much less. So you improved their profit by $1 (hopefully) Instead, if you can make it sell 10x more product (which could be feasible), hence having a better effect than savings.

daemon13 14y ago
Let me put my finance hat on :-) >> Savings are naturally limited, growth is potentially unlimited That's in theory - check annual revenue growth rates of most big companies in mature [developed] markets - if you increase it from 3% to 5% you are hero. >> Let's say your company sells a product and it costs $10 to make it. You can go and maybe make it cost $9 to make it, but not much less. So you improved their profit by $1 (hopefully) If you reduce cost or expenses by $1, you improved profit by $1. There is no hopefully, this is how things work. Also, most of the savings are in operating expenses, not in cost of goods sold. >> Instead, if you can make it sell 10x more product (which could be feasible), hence having a better effect than savings. Exactly as I said, it depends on the company. Probably, you are using a start-up as an example, which is another Google, which annual revenue is growing 150% month-on-month and which margins are 70-80%. I highly doubt how anyone can make it sell 10x more product for a traditional multinational company - FMCG, Farma, Financial Services, etc. Let's be kind of realistic ;-)
- raverbashing 14y ago
  Oh sure, sometimes in saturated markets it's easier to increase profits by cutting costs. "There is no hopefully, this is how things work." Of course. But with your new unit cost you may want to cut the sales price of the product, expecting to sell more, or something like that. You may also cut your costs and then it backfires. That's where the 'hopefully' part comes from