July 19, 2021

Profit Increase Calculator

Read more about Business

Wondering how different parts of your business can increase net income? Use this profit increase calculator to see if you're leaving money on the table.

Is your business living up to its full potential?

In other words, could your profits be higher?

With this calculator, you can get an idea of how much extra profit your business could be making. Plus, find out how to address different aspects of your business and how they can boost your bottom line.

Profit Increase Calculator

How to Calculate Profit Increase

You can calculate potential profit increase by taking your current performance figures and multiplying them by different percentages. Here's how our calculator does it:

Step 1: Enter your current performance figures

  1. Define how many total potential customers your business has.

  2. Next, figure out your conversion rate. How many of your potential customers are actual customers?

  3. Then, enter the number of transactions per customer.

  4. Find the average value of each sale, expressed as a dollar amount.

  5. Finally, define your current net profit percentage. This is the ratio of after-tax profits to net sales.

Step 2: Enter the improvement factors as a percentage

The last step of this calculator is to enter the percentage increase for each factor:

  • Potential customers
  • Conversion rate
  • Transactions
  • Sale value
  • Net profit

There's no right or wrong answer for these inputs - they could be your "ideal" numbers or whatever you think is reasonable growth.

You can experiment with different percentages to see what effect they have on your bottom line.

Want to single out a specific aspect of your business? Enter a percentage for only one of the inputs and leave the rest at 0%. This will let you see how increasing just a single factor - like number of customers or sale value - can increase your overall profit.

After you've entered the improvement factors for each input, hit "Calculate".

Step 3: Review the improved profit figures

The calculator will give you a table of your improved performance figures. These numbers are based on the improvement factors you've entered in the previous step of the calculator.

At the bottom, you'll also see how each of these increases will affect your resulting net profit, and how much it's increased by.

Wondering what to do with these numbers? We'll break it down below.

How to Boost Business Performance

After toying around with the calculator, you may have decided to focus on a specific aspect(s) of your business in order to increase profit. But of course, that's easier said than done.

Here are some ideas on how to address each factor of your business:

How to increase potential customers - Look for ways you can reach more people. Are there any social media platforms your business is neglecting? Is there a way you can leverage SEO or networking?

How to increase conversion rate - You want more of your potential customers to become actual customers. Consider offering a referral program or free samples of your product, if possible.

How to increase number of transactions - Try cross-selling a related product or offering a rewards program. If you can afford to, try offering a promotion at a time when customers might not be buying otherwise.

How to increase average sale value - Increasing prices is not always the answer. Try bundling products or upselling your customers on higher-value items.

How to increase net profit percentage - Look for ways to cut on costs and boost revenue overall. Can you reduce operating costs or utilities? Offer sales to encourage "impulse buys" and increase revenue.

Ways to Save Money as a Business

Part of increasing profit can also involve reducing costs. Here are a few ways for your business to save or earn some extra cash.

Bottom Line

When trying to increase profits, you might feel inclined to "throw spaghetti at the wall" to see what sticks.

Instead of winging it, this calculator can help you see how small changes to different aspects of your business will increase profit. That way, you can create a definitive plan to focus on certain areas of your business.

Holly Zorbas is a guardian of content and community at CreditDonkey, a credit card comparison and reviews website. Write to Holly Zorbas at holly.zorbas@creditdonkey.com. Follow us on Twitter and Facebook for our latest posts.

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