entrepreneurship. Platform merchants keep a watch on its profits margin, which is the most accurate indicator of how successful their sales efforts are in relation to your expenses.

What is meant by Profit Margin?

The total sum of money you deposit into your bank account following a transaction is called the profits margin. 

The formula for calculation of Profit Margin = (total revenue – expenses) ÷ (gross sales – [returns+ discounts+allowances]) × 100 

Why is Profit Margin Important as a Concept? 

  • The bottom line of your business and your capacity to attract investment depend on your ability to raise profit margins.
  • Investors consider the profit margin of any other business as a yardstick of how well it controls costs when assessing a potential investment. 
  • Increasing your profit margins might also make your company more resistant to hyperinflation or a downturn in the economy.

5 Ways to save money and boost profit margin 

1) Streamlining Expenses

Without a speck of doubt, profits are directly impacted by expenses; all platform merchants are well aware of this factor. Expenses make up exactly half of the equation besides sales. So, you can reduce your operational costs as much as you can to boost profits. There are numerous steps you can take to that effect, including:

  1. Looking at potential problems, including superfluous staffing.
  2. Identifying subscriptions or services you may not be utilizing frequently and removing them from the budget.
  3. Avoiding costly office merchandise if the majority of your crew can possibly and efficiently work remotely.

The essence of streamlining costs is to reduce wastage. Such wastage can take many forms in the ecosystem of platform merchants. Some wastes to be looked after by platform merchants for the concern of savings are: 

  1. Delayed wait times between various processes result from workflow inefficiencies.
  2. Unwarranted movement or transportation of products increases delays or costs.
  3. Overproduction by way of producing items before they are actually required.
  4. Underutilization of all the resources due to the inability to make optimum use of equipment, human capital, services, and budgets.
  5. Unnecessary and excessive processing of goods without any viable value-addition to the end product.
  6. Financial burn-outs due to managing and storing superfluous inventory.
  7. Defective quality issues ultimately lead to reduced product value.

2) Automation and Technological Improvement 

An extremely popular and guaranteed avenue platform merchants can opt for when raising profits as well as increasing the overall quantum of sales is finding ways to automate certain tasks their business has to consistently undertake and execute. 

Identifying ways to automate some of the operations your platform performs regularly will go a long way in assisting platform merchants in inculcating a profitable savings practice. There are definitely some ineffective daily procedures that strain your team if you squint close enough to search for them.

Once platform merchants successfully point such lacunae out, they should next look for tools that can effectively automate them and save the staff members’ time. Almost always, having the freedom to concentrate on your most important duties can help you cut operating costs. Digitization and automation is a very vogue practices today and can, thus, bode the best for modern business and consumer interests. 

Finally, automation and the adoption of superior technology come with another advantage for the platform merchants. Better technology has led to the easy and accessible availability of large data volumes and compendia. This has given rise to eCommerce analytics and reporting, a clever method of managing brand platforms for more savings, sales, and profits:

  • Businesses would be able to impeccably foresee and understand changes in customer behavior or online buying patterns thanks to the insights generated there.
  • Profit margins can be boosted by the dynamic modulation of all business operations, from generating leads to post-sales support. 
  • As an outcome, platform merchants are able to make decisions that are quicker, wiser, and more efficient — enabling them to adjust to these shifting requirements.

3) Strategic Pricing and Enterprise Auditing

At its roots, boosting your profit margin is a matter of improving the key processes and operations which might be posing as an impediment and holding platform merchants back. And as it may be evident to most, you cannot accomplish that end if you lack any concrete idea about what exactly those points and issues are.

Dynamic Price Mechanism 

If you can intelligently and effectively raise pricing without upsetting too many clients, you will be able to boost profits on all the sales you make, which will immediately increase your profit margin.

In spite of this, many companies are hesitant to even consider this tactic because — 

  • It is much simpler to say than to actually raise such aforementioned prices gracefully. 
  • Pricing models are complex, and there is no universal solution that any business may use to get the outcomes it desires. 

Platform merchants need to undertake 

  1. competitive benchmarking
  2. in-depth market research
  3. strategically construct and comprehend client base personas
  4. be ready to ride out the waves of trial and error;

If they want to identify the one that will work best for them in boosting profits, sales, and savings.

Based on characteristics like:

  • market position
  • industry 
  • product portfolio
  • wider economic conditions

Optimal pricing methods differ from business to business. Platform merchants are advised to adapt accordingly.

Keeping Tabs on Expenditure 

In the next step, platform merchants must carefully consider all of the important aspects that affect their ability to generate income or control production costs, including: 

  • commodity production procedures
  • expense patterns 
  • service targeting
  • customer acquisition 
  • retention plans

When having the desire to earn profits, one cannot charge head-first into the sales process blindly. 

Platform merchants need to find out what is being done incorrectly and make an effort to fix it. Examine your cost reports to identify any extravagant or wasteful spending. When wastages go unnoticed for a long, they begin corroding and diminishing your profit margins by pressing you to compulsively go for many profit-killing tactics, such as markdowns. 

Therefore, pinpointing and culling these wastes can be an excellently effective technique to increase profits and savings for platform merchants. Money savings should be a top concern. Identify the points in your sales process where an unusually high amount of prospects lose interest. To examine if you can strengthen how you entice and keep clients, evaluate your marketing techniques and service architecture. To find out how your industry peers are doing, conduct competitive benchmarking.

4) Brand value, perception, and awareness

At a time when E-commerce is booming and accounts for around 25% of all retail sales worldwide, branding has emerged as a competitive difference. As a result, your chances of standing out from all the noise are stronger the sooner you invest in a branding plan that cannot fail. Of course, the fundamental components of your mercantile platform are a recognizable logo and a snappy tagline. Yet branding encompasses far more than just aesthetics.

Your brand is only worth what you put into it. To put forth a practical illustration with statistics, the profit margins for the cosmetics and ornaments industries are 62.53% and 58.14%, respectively. However, given that these are the types of industries that hold themselves in high regard, and as such, this phenomenon should not come across as surprising. 

On the other hand, retail stores that offer electronics and sporting goods, on the other hand, have profit margins of 41.46% and 43.29%, respectively, which allows them in such a category where the brand is completely forgotten by the masses owing to its promotional invisibility in the relevant markets.

This variation demonstrates how perceived product value affects sales, savings, and profits.

Customers have a personal connection with retailers of jewelry and cosmetics. They are advertised as having the power to improve you. Moreover, upscale packaging or retaining ingredient transparency boosts the brand experience and increases its profitability. 

In all cases, the heightened status or appeal and elitism attached to a brand will amplify its demand and, by extension, its sales. The emphasis on such upscale brand positioning will indirectly or directly boost profit margins. Platform merchants can follow a similar strategy to advertise and market their platform in order to improve the perceived value that the public holds with regard to their particular brand. 

5) Acquisition, Broadening, and Retention of Customer Base

All platform merchants looking towards achieving heightened profits and sales must place a high priority on customer acquisition and retention because it is the best growth strategy. Retailers will have to pay significantly more—roughly five times more—to gain new customers, further reducing their profit margins if bad user experience or customer service causes them to lose repeat business. With a combination of physical and digital mercantile platforms in use, it becomes very critical to determine the best channel for each type of goods and develop the flexibility to shift investment from one channel to another as necessary.

When platform merchants compare their sales figures to the results of their international marketing initiatives, they can discover which marketing strategies work best for them. This enables them to focus on the campaigns and channels that have yielded the best results and reproduce those in subsequent marketing initiatives. 

They could boost profits and decrease cost per acquisition, leading to monetary savings as well. The most profound impact on platform merchants‘ gross profit margins can easily be effectuated by 

  • Using the vast volumes of proprietary data they now have to guide their future strategy.
  • Conversion rates may be increased by combining personalization efforts with machine learning skills.
  • Retailers may also raise their customer retention rate and reorder value by looking at the: i. preferences.


The profits margin depends on the type and conditions of the concerned industry but is typically gauged at around 10%. Profit margins generally are influenced by situations such as 

  • slow sales
  • the economy
  • sociological changes in clientele
  • Failing business strategy.

Artificial intelligence, machine learning, big data analytics, and cognitive process automation have a significant impact on the profit margin and sales of platform merchants. But, selecting the best combination of applications and putting them into practice necessitate careful planning, quick execution, and efficient reforms in management standards on the part of platform merchants. 

In order to generate long-term value and savings, this will necessitate enhanced cross-functional cooperation in addition to the upgrading of old IT systems. These are important investments that can aid brands of platform merchants in growing in a market that is becoming more difficult and complex.