Profit margin expansion<\/span> in long-term reference, it is a measure of a company’s net profit margin in the latest reported quarter. And divided by profit margin in the fiscal year previous. <\/span><\/p>\n In short-term reference, a measure of a company’s net profit margin in the latest reported quarter divided by profit margin in the quarter immediately preceding.<\/span><\/p>\n Your profit margin is a metric that should always be on your radar, and for good reason: it answers critical questions about your business, like whether or not you\u2019re making money or if you\u2019re pricing your products correctly.<\/span><\/p>\n Continuous margin expansion is possibly the best sign of growth in a business. And stock pickers simply salivate at such prospects.<\/span><\/p>\n Unfortunately, there is no magic cure. Improving profit margins requires major strategic changes to your business, but if you\u2019re serious about becoming more profitable.<\/span><\/p>\n Margin expansion in isolation could mean nothing.<\/span><\/p>\n Analysts say investors should see whether such expansion is sustainable, and look at how other parameters are working for a business, before taking a call on a stock.<\/span><\/p>\n The most basic way to increase margins is to increase prices. If you\u2019re currently earning a 15% gross margin, and you want to increase it to 25%, increase your bill rates by 10%.<\/span><\/p>\n You\u2019re going to lose clients. In fact, you\u2019re likely to lose every client that\u2019s unwilling to pay higher rates. <\/span><\/p>\n And unless your services are noticeably better than your competition, you will have a very hard time finding new clients.<\/span><\/p>\n The idea with this strategy is to become a shop. But a specialty firm, known for doing one thing very well.<\/span><\/p>\n If you\u2019re constantly facing margin pressures, the problem may be your clients. Some companies will always be price buyers. <\/span><\/p>\n Some only care about \u201ccommodity-level\u201d service. <\/span><\/p>\n Others are able to choose from lots of seemingly identical staffing vendors, so low price wins. <\/span><\/p>\n And finally, some companies may be in industries that simply cannot afford to pay more for better quality or service.<\/span><\/p>\n The key to making this strategy is to refocus your sales and service efforts on companies that demand higher quality people and service.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":" DEFINITION of Profit margin expansion Profit margin expansion in long-term reference, it is a measure of a company’s net profit margin in the latest reported quarter. And divided by profit margin in the fiscal year previous. In short-term reference, a measure of a company’s net profit margin in the latest reported quarter divided by profit […]<\/p>\n","protected":false},"author":4,"featured_media":7036,"parent":3040,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"","meta":{"content-type":"","_exactmetrics_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0,"footnotes":""},"class_list":["post-3511","page","type-page","status-publish","has-post-thumbnail","hentry"],"yoast_head":"\nWHAT IT IS IN ESSENCE<\/b><\/h4>\n
HOW TO USE<\/b><\/h4>\n
Of course, this strategy may come at a big cost. <\/span><\/h3>\n