Profit Margin vs. Sales Volume

When it comes to increasing your bottom line, there are two approaches retailers may take: Increase profit margin or increase sales volume. Ideally, a company would do both, but that’s usually not possible, especially during a recession. Taking a couple steps back, Profit Margin (PM) is the percentage of profit you make on a sale, after taking all of your costs into consideration. For example, if you bought a TV direct from the manufacturer for $100, and sold it for $200, your gross profit margin would be 50%.

Sales Volume (SV) refers to the total number of sales that you make. Some retailers are more focused on the total sales volume, and simply look to move as many products as they can, usually by focusing on a low-price strategy, thereby resulting in a lower profit margin. This allows them to make more sales, but at what cost? Say you took that TV you bought for $100, and sold it for $150 instead of $200. Your margin just dropped to 25%, and you made $50 less. The theory here is to realize more sales, in order to “make up” for the decreased margin. This strategy works extremely well for big retailers, such as Wal-Mart, that operates on a razor thin profit margin of barely 3%.

The reason that Wal-Mart is able to sell at such an unheard-of profit margin is because they make up for it in volume. This strategy works great for large retailers, but the same strategy can backfire for someone in the specialty electronics industry.

When you sell based on price instead of margin, you are inherently facing several problems. The first is when you realize what brought customers to you in the first place. They bought from you because you had the lowest price for the product they wanted. They didn’t come to you because of the relationship you had built with them, your customer service, the sales experience, technical support, or brand recognition. They bought from you because your price was simply a few dollars lower than your nearest competitor. So you may have got the sale this time, but next time that customer wants to buy a product…instead of going directly to you, they again start their search for the lowest price. By then, your competitor might have undercut you by a few dollars, and since you were simply selling on price, as soon as a competitor pops up that sells the product for less, you’ve lost your customer.

On the other hand, rather than focusing on the price, smart smaller retailers focus on the added-value they package with every sale: Great customer service; helpful technical support; a friendly a knowledgeable sales staff. These are the things that keep customers coming back to you every time they want to make a purchase. And when you do that, combined with a healthier profit margin, you will see that even if you make a few less sales, you can still make more money with higher profit margins.

For a more applicable example, let’s take KJB’s Sleuthgear Recluse. If your cost for the Recluse is $249, and you sell it for the MAP price of $449, you’d make an easy $200 per sale. At that price, let’s say you sell 5 per month…your total profit would be $1000. Maybe then you decide if you lower your price, and sell it for $349 instead, you can sell an additional 3 units per month…so now you’ve increased your sales to 8 units, but since you lowered your profit margin, you’re actually only making $800 in profit. So just because you made more sales, you’re actually making less money per sale. At the end of the day, which would you rather have, more total sales, or more money in your pocket?

For one other quick example, let’s take the D1400 Voice Recorder. Let’s say your cost is $19, and you are deciding whether to sell it for $49 or $29. At $29 you’re may sell 20, for a total profit of $200. At $49, you might sell a few less, maybe 15…but at a total profit of $450. By keeping your margin higher, not only will you make more money, but you will be able to more easily absorb incidental costs such as return and technical support costs.

The lesson to take from this margin vs. volume discussion is that lowering your price, while having the advantage of possibly increasing sales, does not necessarily translate to more profits (and in many cases, results in lower profits). By keeping your margins higher on your products, you can put more money in your pocket, which at the end of the day, is the goal of every business.

The Indoor/Outdoor Recluse is almost here!!!!!

Check out the NEW Indoor/Outdoor Recluse! Just like the original model, the Indoor/Outdoor model is completely covert, the camera and DVR are undetectable in the plain black box. Now its weather resistant and features a mounting bracket. Buy the original for inside and the Indoor/Outdoor for everywhere else!

WARNING - Don't be Fooled by Recluse Knock-off!

We have just discovered that two different companies; one Chinese, one American, are advertising a product similar to our SleuthGear Recluse Tissue Box. While they appear to be using a picture of our product, their product is not nearly as good as the actual Recluse. Take a look at this actual picture of the knock-off:


You can see the big hole in the side for the camera. This is not covert at all! Our SleuthGear Recluse Tissue Box is the only truly covert, total box camera/dvr system of its kind and KJB Security Products is the exclusive distributor. These other companies are using our good reputation to promote a cheap, badly designed product. Don't be a sucker to their dishonesty! Be alert to knock-offs and buy the best from KJB Security Products.

KJB Security Products is pleased to announce that we have become the exclusive United States and Canadian distributor for Thumbs Up (UK) Ltd. Thumbs Up is a global developer and distributor of the latest, exciting, innovative product lines of gift, novelty, toys, gadgets and technology products. Check out the North American website at www.thumbsupusa.com to see what all the excitement is about.

KJB Security Products is committed to serving our customers even better in 2009! After extensive research and just plain-hard work, we are proud to announce our state-of-the- art, ERP Software System. This system will propel KJB to the highest levels of quality and service and further solidify our reputation as the premiere technology distributor in the wholesale spy and surveillance equipment industry. This massive undertaking is the next advancement in our endless quest for improvement and growth. With our new software as your seamless backbone, we’ve added more service to help you expand your business. Just one more way for KJB to show our commitment to serving the needs of our valued customers.

New Product Alert: Phone File Pro and Flashlight DVR Camera

Introducing our hot selling latest technology in SIM Card Readers, the Phone File Pro.

Our smart card reader can read any and all SIM cards and recover text messages and data from cell phones without needing constant updates to make it compatible with the latest SIM cards. Save and edit address and phone messages or use the unit to archive data on your computer. If you change phone or carriers the Phone File Pro allows easy transfer to the new SIM card.
Item: P9900



And don't miss the Flashlight DVR Camera!

Hidden inside this flashlight is a color CMOS camera and DVR with 2GB of built in memory, what better way to capture video in the dark! Completely self contained with an internal rechargeable battery, this functional flashlight is easy to use. Charge it up and push the button to begin recording or easily attach its USB connection to any computer to view the recorded video. Great for security operations such as covert evidence gathering, after-hours security, and checking IDs or use it for everyday record keeping such as home/car inspections or personal property recordings. With the Flashlight DVR Camera anything you can point a flashlight at you can record on video!
Item: DVR1500

Good Times at ISC West

Things have been hopping since our return from Vegas. Here's a few pictures from the few moments we had to relax.



Zeke Hadi with Startech Outlet and Ralph Thomas of Thomas Investigative Publishing, relax with Jill Johnston, president of KJB Security Products.