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This is a guest post by Andrew Youderian of eCommerceFuel.com 

People LOVE to talk about revenues. The numbers are big, impressive and easy to fixate on. But when was the last time you heard someone bragging about growing their margins or improving business efficiency?

These metrics aren't nearly as sexy, but they're immensely important. As the saying goes, “It doesn't matter how much you make. It matters how much you keep.” With that mantra in mind, here are three highly-effective and unintuitive strategies to improve your business's bottom line.

Raise Your Prices

Raising prices is a terrifying prospect. As entrepreneurs, we assume that customers will abandon us, sales will dry up and our business will collapse into the dust-heap of failure. But like most fears, we tend to grossly overexaggerate the consequences and underestimate the benefits. Especially if you're reselling an existing product in your ecommerce store, a small increase in price can do miracles for your bottom line. 

Imagine the following scenario for a popular item in your online store: 

  • Item Retail Cost:  $100
  • Wholesale Cost:   $80
  • Profit:                   $20
  • Profit Margin:      25% ($20 profit / $80 cost)

Now image that, after being inspired by an article on the Shopify blog, you re-priced this item at $110:

  • Item Retail Cost:  $110
  • Wholesale Cost:   $80
  • Profit:                   $30
  • Profit Margin:      37.5% ($30 profit / $80 cost)

Our minor 10% increase in prices resulted in a massive 50% increase in profits and gross margin!

Under the best-case circumstances – assuming you have a strong unique selling proposition and aren't competing on price – your conversion rates won't dive and you'll have achieved an instant 50% increase in your overall profits. Even with a significant 30% drop in conversions, you'd still be making more money than under your old pricing model, but with fewer customer servicing costs to consider. 

I successfully used this approach with my own ecommerce store to instantly increase my bottom line by 25%. It was, bar none, the most effective technique I've ever used to increase profitability. 

When implementing this strategy, keep the following in mind: Make sure you test different pricing levels. While raising prices is often very effective, you'll need to confirm it for your market/business.

If you have a large catalog, testing pricing on thousands of products can be a tall task. Start out testing pricing on only your best-selling products instead.

This strategy relies on having a unique selling proposition and offering value to your customers. The more price-sensitive your customers, the less effective this will be. If you don't have a unique selling proposition, you need to get one.  

Don't Obsess About Per-Order Profits

Many businesses are unwilling to lose money on an order, even if that means ending the relationship with an unhappy or dissatisfied customer. You may have had a similar experience, which often goes something like this:

“I'm sorry, sir. We only made $X on your purchase, so if we (fill in your reasonable request here), we'd lose money on your business. I hope you understand.”

This is a penny-wise but pound-foolish approach, and a terrible way to do business in today's highly social and connected world. If you're not consistently losing money on orders to quickly and pro-actively resolve customer problems, you're missing out on the chance to improve your bottom line.

Customers are so accustomed to mediocre service that when a business goes out of its way to proactively resolve a problem – without charging them – they're blown away. Apart from the life-long value of that customer, you'll receive valuable referral marketing and recommendations that are impossible to purchase.

If you're running an ecommerce store, here are four ways you can invest in the future of your business and, ultimately, your long-term bottom line:

  1. Did something inexpensive break? Ship customers a free replacement immediately without requiring them to hassle with the return.
  2. If an expensive item needs to be returned, ship them a replacement as soon as they submit tracking confirmation of the return, instead of waiting until it hits your warehouse.
  3. If a long-time customer needs something ASAP, overnight it to them at no charge.
  4. If a customer wasn’t happy with a purchase, proactively issue a partial refund to help compensate him for the disappointment.

Serving customers like this will cost a bit more in the short term, but will pay incredible dividends as you build a loyal and highly vocal fan base that results in a very healthy bottom line.

Reconsider Offering Phone Support

Would you be willing to reduce your workload by 50% if it meant only giving up 15% of your business? I would, and did, when I stopped advertising my toll-free sales number on one of my sites.  

We were able to take the savings – both in terms of time and money – and pour them into better serving our online customers and improving our site. While phone support is a rarity among many online businesses, it seems that a disproportionate number of ecommerce merchants still feel it's necessary. 

After the previous section, which championed outstanding customer support, this may seem like a major contradiction. But great customer service doesn't mean being all things to all people. It simply means taking outstanding care of the customers you've chosen to do business with. Based on your product and market – especially if your price point is lower - offering phone sales support may or may not be a wise use of your time.

Try measuring the impact removing your phone number has on conversions. You'll likely be surprised that the vast majority of people simply order online. If you do decide to offer a sales line, try to place it in strategic places such on the “Contact Us” page or in the shopping cart, where only qualified prospects will see it. If you serve both individuals and businesses, you can also experiment with a business-only phone line.

If you decide to scale back your phone support, make sure to:

  1. Be honest with customers and let them know WHY you don't list a telephone number. Tell them you prefer to invest in a quality website and outstanding customer service for your existing clients.
  2. Ensure you have a highly detailed, informative website to answer customers' questions.
  3. Have fantastic email support if customers can't reach you easily via phone. Using a help desk like Desk.com, HelpjuiceZendesk, or Kayako will ensure that your email correspondence is top-notch, and that requests don't go unanswered.

Also, don't write off the phone entirely. If a customer requests a call back, or if you need to resolve issues that require personal attention, make sure to pick up the phone.

The Biggest Danger Is Inaction

Change is always scary, and you may be reluctant to implement these suggestions for fear of what might happen to your business. But experimenting with these ideas will likely go unnoticed by most of your customers, especially those new to your business. If the changes aren't beneficial, you can always revert back to your old policies and pricing.

Without taking action, you'll never know how much money could be added to your bottom line. 


By Andrew Youderian, an ecommerce entrepreneur and the owner of numerous online stores. You can learn how to create a profitable online store with his free 55-page eBook. Also check out his blog, eCommercefuel.com.