How can a small Business make Extra Cash with Limited Capital.

 

Profit is one of the major reason why people do business profit is calculated by taking out expenses from the revenue, in other words profit is the reward to the entrepreneur for the risk he have taken by doing the business profit can be in form of a normal profit or super normal profit. PROFIT = TC-TR

In order to increase profit a firm can take the following steps either by cutting down the cost of production including labor cost material cost and over head costs when the cost is reduced profit is increased although the selling price remains the same. The total cost will be less leading to an increase in profit

Apart from this the firm can practice price discrimination in this way it will be able to sell product to different class of people charging the price which they are able to pay. Different markets can be segmented on the basis of age, region, gender, income and or use of product

A firm can also increase the price of its product if the demand of product is price inelastic or reduce the price in case the product is price elastic.

Other than then this firm can use benchmarking of its products and  using advertising methods direct or indirect depending on the nature of the product, product quality can be improved, packaging can be changed us of promotional camping’s.

Non price competition agreement can also be used this article highlighted a brief way how profit can be increased if you have any questions you are most welcome.

More by this Author


Comments

No comments yet.

    Sign in or sign up and post using a HubPages Network account.

    0 of 8192 characters used
    Post Comment

    No HTML is allowed in comments, but URLs will be hyperlinked. Comments are not for promoting your articles or other sites.


    Click to Rate This Article
    working