More Trouble Shooting Tips – 25

5/1 Ratio

In the usual 5/1 ratio;  the item that sells for $5.00 means it was purchased for $1.00.   The $5.00 is broken up….

$1.00 for a new item.

$1.00 in case prices rise.

$1.00 for salaries.

$1.00 for utilities.

$1.00 profit.

Putting it  into practice;  these  chairs cost the business about $20 each. By the 5/1 the chairs should be sold for $100 each.

A few of the chairs have sold, but most are still there 30 days later.    The price is now dropped to $90.    A few sell.  The price is then dropped to $80.

Getting those chairs out of the door is the key feature.   The price can drop to $40 and the business would not lose money.

Not losing money, not having dead money is the focus.