Companies that have the privilege and have worked hard to creation as well as sell a product can still improve. Many companies sit back to watch revenue pour in while others continually try to maximize profits and create a superior product. The ability to drive down costs does not mean the price of a product has to go down but rather the company becomes more profitable.
Priority should be placed on retaining current customers as alienating this customer base can lead to disaster. Keeping the quality of the product the same or better along with a dedication to customer service is a recipe for success when driving costs down. Below will investigate the methods a tech company can use to reduce cost per unit sold of a product without impacting quality negatively.
Marketing Plans Need to be Based on Data, Not Gut Feelings
The cost per unit sold will incorporate the money spent on both marketing and advertising. A marketing department that does not use data to back up their strategy needs to start doing so. Data can be collected in an automated way leaving the marketing team to translate this data into an actionable plan. There are going to be some marketing/advertising tactics that simply do not work in terms of ROI.
Incorporating a tactic simply “because all campaigns should have it” when the tactic is not supported by data needs to be stopped. Gut feelings can no longer direct marketing campaigns with a variety of tools available to collect data in today’s digital marketing world.
Utilize Freelancers Where Possible
Freelancers can be extremely valuable whether they are used as customer service reps or to help with things like sales prospect list building. Data entry is the perfect example of a job where a company can easily save money by enlisting the services of a freelancer. Most of these freelancers work on an hourly basis so when their services are not needed, they are not costing the company money. Marketing can be outsourced to a company or freelancers for a fraction of the cost of a marketing department.
Freelance writers can create quality content for an affordable price and freelance web designers can have top of the line skills. A marketing department that never delivers should be supplemented with freelancers. If the freelancers outperform the department, they should replace the current marketing team.
Bulk Ordering Product Pieces
The bulk ordering of product pieces gives a company bargaining power to help drop costs. Doing electronic parts lookup can allow a company to see the various businesses that carry the part needed. Being able to shop around can lead companies to drop prices in order to land a large sale even if their profit per unit sold decreases. Providers of certain parts might use different quality parts though so this needs to be observed closely.
Products with fragile parts when the product was durable in the past will be an obvious sign the product’s quality has gone down. Consumers are very observant when it comes to products that they have used for years so tinkering too much with the product can be asking for trouble.
Manufacture Outside of the US
The cost to manufacture inside the US is going to be far more expensive than sourcing it to another country. The advantage of doing this domestically is the ability to drop in to see how things are going. Doing this becomes far more difficult when executives of the company have to travel thousands of miles to do so.
Manufacturing internationally does not mean that the quality of the product has to decrease in any way. Plenty of manufacturers produce the highest quality of products in all niches to send around the world. Visiting the factory is imperative though without announcing the visit to make sure staff of the factory is treated in a satisfactory way. A sweatshop producing a popular item and being broadcast on social media is a fast way for a product to fall out of favor with the public.
Continuously Look for Cost-Efficient Shipping Methods
The one aspect to admire about Amazon is their dedication to continuously push its shipping to the next level. The future could hold drones being used full-time which will cut the time needed as well as carbon emissions produced by shipping trucks. Partnering with a major shipping company can help save money on each order shipped which increases profit per unit sold.
The rental of a few warehouses where products can be packed to be picked up for shipment around the country can reduce shipment times overall. In the time of consumers wanting a product almost immediately after purchase, the speed of shipment is more important than ever.
Being as honest as possible with customers about shipping times being a bit slower during certain times of the year needs to be done. An informed buyer is far less likely to be upset about an extra day or two added to the shipping time if it is clear before they completed their purchase.
Decreasing costs while maintaining quality is a balancing act plenty of companies find difficult. Slowly implement these changes to assess how the change impacts the quality or what changes do not impact quality at all. Decrease costs and maximize profit as soon as possible!