Profit > Revenue: Tiny Tweaks, Bigger Take‑Home  ## Metadata - Author: [[The Amy Porterfield Show]] - Full Title: Profit > Revenue: Tiny Tweaks, Bigger Take‑Home - Category: #podcasts - URL: https://share.snipd.com/episode/598b912a-33d7-4aab-960d-700481a2574c ## Document Notes ## Highlights - **Profit, Not Revenue, Is The Goal** - Revenue is a vanity metric; profit determines how much you actually take home. - Amy and Jamie stress reverse-engineering launches to hit profit goals, not just top-line revenue. Transcript: Amy Porterfield So I've got this program called the Millie Club. I've talked about it before on the podcast. And each cohort is a group of 30 entrepreneurial women that are working toward a million dollar year in their business, which is a really big milestone. And inside the Millie Club, one of the things I've noticed is that the biggest aha moments, the light bulbs that are popping off throughout the six months, usually are related to data And numbers, really understanding their numbers. And here's what I mean. So let's say that you want to do a launch and you want to make $50,000 in your launch. Well, if you told me that, the first question I would ask is, how much profit do you want to make? And so if you said, okay, Amy, I want to make a 40% profit off this launch of $50,000 and say, okay, great. But then that's where the real work begins. Reverse engineering your numbers so you know exactly how many leads you need to get from your email list and how many leads you need to get from ads. And then understanding how much are you willing to pay to get those leads into, let's say, a webinar. And then you need to understand how many people do you need on your webinar if there's going to be, let's say, a 30% show up rate and you think you can convert at 8%. So how many sales can you get based on how many people are on the webinar, 30% show up rate, 8% conversion? And that's just the live webinar. What about after the webinar, the emails that go out and you're converting through emails, how many of those need to convert in order to hit your 50,000 revenue goal? Like that's what I'm talking about. Like really understanding your numbers. And some of you are listening and you're like, Amy, I do that all day long. And some of you are listening, thinking, I don't know my numbers at that level, like understanding your P&Ls and understanding your lead count and your conversions on your webinars And your conversions in your bootcamp and how it all leads to that number that you really want to hit. ([Time 0:00:34](https://share.snipd.com/snip/a2fd0119-9853-4ffb-834a-f63f549b1152)) - **Calculate Profit Per Hour** - Track time per offer and calculate effective hourly profit for each product or service. - Prioritize offers that yield higher profit per hour and reduce energy spent on low-return offers. Transcript: Amy Porterfield And again, what might be draining that profit? Yeah. Jamie Trull And, of the most popular things that I see happening in, especially a business that has multiple offers, right, is you might assume that whatever offer is making you the most revenue Is the most profitable, right? And that is often not the case because we have to think about the energy and time involved. And so this happens a lot. Let's say, you know, you might have a one-to business where a lot of your revenue is coming from this one-to business, but then you also have say digital courses or something like that, And maybe less revenue is coming from it. But when you actually work out the amount of time you're spending on each of those different channels in your business and tracking them separately, you might see, oh, actually I'm Making a lot more per hour on this offer over here. So it's really about looking at each and every offer. And I would just start by writing down how much do I make off of each sale of each offer? And how much time does it take me to deliver that? Or if it's something like a digital course, divide that out between all your sales and kind of understand how much you're making on an hourly basis. And I think sometimes people realize, oh my goodness, where a lot of my revenue is coming from one place, it's actually yielding me less when I look at the return on my time. And there comes a point in business, I think in the beginning of business, we're really, we have more time than money typically. Not everyone, but typically, right? And so we are putting that time in, that's our investment. But eventually, and talking about your Millie Club is a great example of this, right? They're probably at the place where their time is more expensive than their money. Their time is now worth more than their money. And so they have to really redefine how they're thinking about that and really spend their time strategically because it is costing them if they don't. Jamie, I love that you really focus on time. You're a busy mom. You've got two kids. Amy Porterfield You're running around, you know, supporting them and ([Time 0:12:54](https://share.snipd.com/snip/7755fc7a-0fb4-48d0-ad26-c27e97c2e9bc)) - **Use Profit Levers Strategically** - Pull profit levers beyond just selling more: raise prices, increase average transaction value, and add upsells. - Use complementary offers to boost revenue per customer without finding new buyers. Transcript: Jamie Trull And so when I talk about the profit levers, there are eight of them. I won't talk about all of them here today, but ultimately it's little tweaks that you can make in the equation that is your profit. And some people think it's just, okay, your profit is revenue minus expenses. So aren't the only levers increase revenue and decrease expenses. Those are the main ones, but there's a lot of smaller things in there that you can do. So increasing revenue isn't just increasing sales. It might be looking at your price, which is another profit lever, right? It's number of sales times the price you're charging. That is what determines your revenue. So that's one place to look. That's often a big place to look. And a lot of times you might know in your heart of hearts that you're not priced properly, especially if you feel any kind of angst around pricing. If you feel like you are getting taken advantage of or you feel any kind of way about your pricing, it might be time to take a look at that. But then there are other things like average transaction value. You can also increase your average transaction value. Amy, you are such a good example of this. I point to you all the time because you have a good way of figuring out what else could people need that would complement the thing they're already buying. We call them upsells or, you know, whatever it is. But ultimately, it's thinking about this person already has, you know, raised their hand and said, I need this thing, and I'm going to buy it. And then having something else that isn't pressure filled, but is like, hey, you might also be interested in that. That's what grocery stores do when you walk down the aisle and you see, you know, oh, there's some gum here. Let me grab that too. That would be great. Or let me grab this magazine. Or your kid makes you buy a king size Reese's, right? It's smart. They do that because not everybody is going to do that. But each person that does it, it increases the average transaction value without you having to get a single additional sale. So those little tweaks are different ways to increase just the revenue part of the equation in lots of creative ways. So when you let yourself get a little creative with it, it can actually be fun ([Time 0:16:50](https://share.snipd.com/snip/a5c974df-5888-44b1-a7ba-2f66cdfe8eee)) - **Hiring Grew Profit And Freedom** - Jamie discovered she was running too lean and hired a larger team, which increased profit and reduced her work hours. - Investing in team and systems turned into a major profit lever for her business. Transcript: Jamie Trull To increase revenue, but my, what I found most helpful for me was actually going through the cost levers. So we have a direct cost and an indirect cost lever. So those are basically levers to help you control your costs. And most of the time we think of the cost lever that we need to be reducing costs, right? It's time to cut everything, all the expenses. That's what your accountant will typically tell you to do. Oh, you got to reduce expenses. But actually I found in my case, when I really looked into it, I was running really lean and actually I was running probably too lean for a long time. Okay. Tell me more about that. What did that look like? Yeah. I was, I was hesitant to invest in a team to help me, right? I was doing so much on my own, again, valuing my money over my time, which is crazy because there's only so much time that I have in life. So I just was doing everything myself. And I was afraid to invest that money because what if I didn't get a return on it? And what I was really doing though, was creating, yes, I was maximizing profit today, but at what cost that was basically at tomorrow's profit or next year's profit. And this year is going to be our best year yet. I've also had the biggest team that I've ever had, but we're also going to be incredibly profitable. So it was a great shift to say, I need to actually focus on putting my money to work in my business. That was my biggest profit lever. Where can I put my money to work for me so I don't have to work as hard? So not only was this the best year in our business, I've also worked less than I've worked any year in business. So that has helped me. I think forever, I still have had the working more equals more money equation in my head. That's probably from the corporate world, right? Like that's what's ingrained to us. And what I've found actually is quite the opposite, that when I kind of take a step back, I focus more on the business. I have the people in place who can help me do the things even better than I could do them. And I commit to actually being able to enjoy a little bit of the freedom I've created for myself. ([Time 0:20:10](https://share.snipd.com/snip/59781b60-8714-42bf-a654-bad68da1796e)) - **Price To Fund Growth** - Price to cover your time plus a healthy markup and include hiring costs when setting rates. - Raise prices even if sales dip; higher profit per sale can mean more income with less work. Transcript: Amy Porterfield You know, for me with Digital Course Academy, Jamie, I didn't haven't raised the price since 2019. And every year my CEO is like, it is time. We've added so much. We've changed so much. You're a better teacher now. Like we've got to raise the price. And so I finally said, okay, this is the last year. We're not going to raise the price with the last year, but we definitely, there's, there's some weirdness that comes up emotionally when you start to think about raising your prices, A little guilt or a little fear, whatever it might be. So talk to me about how do you help your clients and your students move past that fear of raising their prices and really like taking action in doing so? Yeah. Jamie Trull Well, as a DCA class of 2019 alum, I know you haven't raised your prices. That is so funny. Yes, you're right. And I've been waiting for you to finally do it because there is so much value in there. But I think it's one of those things where we'll avoid it as long as we can, especially in something like digital courses, because it is harder to price something like that, right? There isn't necessarily like a one for one relationship where you can just take a markup percentage on the cost as there is in other places. And so that is something that it can be a little bit, it does feel a little bit more experimental in terms of what we need to do in order to find the right price. So we might have to work through some of that. And it is a little bit more trial and error as well in a business like a digital course when there isn't specifically a formula, right? So I talk a lot about if you do have cost, even if it's your own time, right, on a one-to basis or something like that, you want to make sure that you're charging your time plus a nice hefty Markup on top of that. You're the business owner here. You need to make sure that you are doing that because one of the things that people who are, let's say, one-on service providers, the problem they can get into is they want to hire, but They feel like they can't because they can't afford to hire someone. And if you feel like you can't afford to hire someone to help you, you're not charging enough, right? We need to base that, include that in when we're setting our prices, even when it's just us, because otherwise it's not going to be scalable. And then we're going to run up against this internal feeling of how do I increase my price that much in order to be able to pay somebody to do this work for me. And instead of raising prices, you're going to fall back on just doing it all yourself and continuing to do it all yourself forever and ever and ever and ever. Amen. And we do not want to get into that, right? We do not want to get into that. So I typically, you know, there is a lot wrapped up in pricing, but you need to run a sustainable business that is paying you well, so that you will continue to be here. I think sometimes people think, oh, you know, what about my customers and my clients? Well, you're not going to be able to have any customers or clients if you're not running a business with sustainable profit margins that ensure you're going to be here a year from now. So make sure it's not a bad thing. I think there's a lot of money mindset stuff that we worry about, or we worry about what people are going to think. People are making the decisions that are best for them. And we don't know what's going to happen when we raise our prices. In fact, we may and probably will have less people buying, but we may be making more profit. And if you can make more profit working less, isn't that the dream, right? Why are we so worried about the number of sales we're making and not the amount of profit that we're making? ([Time 0:25:09](https://share.snipd.com/snip/5ca0c56b-f4cc-43ca-bb58-e75156dd8b66)) - **Your Best Seller May Lose Money** - A business can be profitable overall while specific bestsellers lose money when costs aren't allocated. - Segment offers and allocate costs to see true profitability per product or division. Transcript: Amy Porterfield Oh yeah. Jamie Trull It does often come down to, you know, when you're looking on a product or service basis. So you may have, you may be profitable overall, but a lot of businesses aren't doing that deep dive into each product or service to see how profitable each of them is. So you may have one that you're running at like 60% profit margins and one that's actually costing you money. But net net, you're at 40%. So you keep going. But every time you sell that one thing, you're actually losing money. I've seen this as a virtual CFO. I worked with a company that was actually doing this. Their best seller was losing them money and they had no idea. And that was really hard for them to get past. And there was a lot of feelings around it and worry that they couldn't increase their prices. But I said, they can't afford not to because you're actually spending more than you're making on this. And it can get really muddy if you're not looking at it at that granular of a level, especially if you have multiple different offers. So you want to make sure that you're doing that. We actually divided our business into multiple different divisions this year, just because we wanted to be able to see the numbers a little bit more cleanly. How much is each division bringing in from revenue perspective, which we knew that, but we hadn't gone through the process of trying to allocate out those costs and really understand How profitable each one was. And when we did that, it just really opened our eyes to the possibilities of what we could do. ([Time 0:29:16](https://share.snipd.com/snip/3b47a565-b4cf-4699-a940-46f895741b9c)) - **Include Labor In Costing** - Quantify direct and indirect costs, including estimated labor at market rates, to test true profitability. - Use reasonable estimates and spreadsheets; perfect precision isn't required to make decisions. Transcript: Amy Porterfield So what do they do about that? Yeah. Jamie Trull So I think that that is where you first have to start by quantifying your costs. How much are your costs to create this offer, to deliver it, making sure you're including team time? You can estimate your time as well. So what I tell people to do is if you're spending, if you're a lot of, you know, the muscle behind your business, where you're delivering the offer, not necessarily all the other things That you're doing in your business to run your business, but the actual creation delivery of the offer itself. If you were to hire someone, doesn't mean that you ever would, but if you were to hire someone to take on those duties, how much would you pay them? And then I want you to include that in the calculation. Those are your direct costs. So you want to make sure that you're capturing all of that and then comparing it to what am I charging? And then how much am I making at the end of the day? I think that piece of labor, we're just missing it. And it makes us feel like we're profitable. But at the end of the day, we're actually truly losing money, especially if we wanted to grow in scale, we wouldn't be able to because we couldn't hire someone to do that work. We would actually physically lose money in that case. So that's where I recommend people really start with that. I love that. What's your saying? Something about it doesn't have to be perfect. What did you say? It doesn't have to be perfect to be useful. I love that. ([Time 0:31:56](https://share.snipd.com/snip/6deb0af3-e05f-4e18-9702-edb866359726)) - **Use Retirement Accounts For Tax Relief** - Don't overspend for deductions; instead, use retirement accounts (SEP IRA, etc.) to reduce taxable income. - Check estimated payments now and adjust year-end actions with your accountant to avoid surprises. Transcript: Amy Porterfield I know not the most sexiest topic, but you do make it feel doable. So what's one simple shift someone could make this month that would help them keep more of the money that they're already earning? Because we can't talk about money without talking about taxes. Jamie Trull Yes. So taxes are an interesting thing because I am a CPA and I love to talk about tax strategy, but I still think that profitability is the most important thing. So the thing I always caution people not to do is overspend, things like that, just for the deductions, right? It's great. Make sure you're actually getting all the deductions that are due to you, but don't use it as a license to spend on things that aren't going to have a return on investment. So that's the main thing. But I think that there are a ton of people will look and scour the world for these really obscure tax strategies. I'll be honest, a lot of those tax strategies are more available the more income you make. So millionaires, billionaires especially, have a million different ways that they can save on taxes. As a true small business owner, there are still a handful of more tried and true ways, but it's not about finding those little loopholes to save money. And anybody who tells you there's some loophole that's going to save you all this money is just trying to sell you something probably, right? So I'm a big fan of if we are paying attention to our taxes, if we are saving for them appropriately, we will be less likely to make decisions that don't serve us. So right now it's October. Do you know, have you paid in enough to your taxes? Are you going to owe at the end of the year? This is a great time to be figuring that out. Sit down with your accountant, look at how much you've made this year. How much have you paid in through either withholding or through estimated taxes, however you pay them? How much have you set aside? Make sure you're in good shape because you don't want to get to April and all of a sudden have this big tax bill. And there are a lot of things you can do between now and the end of the year if it's not adding up. So for example, one of the biggest things is just taking advantage of retirement accounts that help you get a tax break today for amounts that you're putting into your retirement accounts. Those are a great way to do it. That's a tried and true way. Anybody can do that. You don't have to be a billionaire to have a SEP IRA that you can actually be getting a benefit from. So those are the types of things where you're not actually spending that money. You get to keep the money. You're just, you have to put it into a retirement account. ([Time 0:35:07](https://share.snipd.com/snip/47ec2985-07d3-4a3a-acf5-0153554a3ddb)) - **Connect Profit To Purpose** - Money enables impact and freedom; connecting profit to deeper values motivates sustainable growth. - Allocate a portion to charity to align profit with purpose and increase motivation. Transcript: Jamie Trull Yeah, this is something I feel really strongly about because I do think, I do think that it can prevent us if we're a lot of times, especially women in business, will say things like, oh, I'm just not motivated my money. Okay. What motivates you? Tap into what motivates you. What do you want in life? My guess is that money can help you get there. I'm not saying it's the end all be all, but my guess is that if you want to live a more free life, spend more time with the people you care about, travel the world, all of those things are helped When you have money. And again, it doesn't mean that it's everything, but I think that that is something that's easier to connect to. It's really about kind of going back to that why. Why do you want to do this to begin with? And something deeper than just I need to pay my bills, right? I'm doing this to pay my bills. Because you're not going to strive in that case. You're not going to really live up to what you could be and what you could do. So really connecting with what matters to you. And maybe that's also giving. I think a lot of people, again, have this negative view of money that money corrupts. But think about the amount of people. I mean, people talk about money doesn't buy happiness. Well, if you're a person that doesn't know where your next meal is coming from, it actually does. Let's be honest. Situations that money makes a really big difference. It may not make a huge difference to you, but there are people out there that need your help. There are organizations out there that need your help. It can make a huge difference. So if that helps you, then I definitely recommend having that charitable piece of your business, have a percentage that goes off the top towards the things that you care about. ([Time 0:38:10](https://share.snipd.com/snip/e07c98cf-80eb-4af8-a51e-efa61453deed)) - **Be The CFO And Experiment** - Take control by testing small percentage tweaks across profit levers rather than waiting for perfect data. - Experiment intentionally and own financial decisions as the de facto CFO of your business. Transcript: Jamie Trull So I would say I want people to realize they're more in control than they think. We worry about what's going on in the economy. I mean, I see it all the time. There are certain things that are always going to be outside of our control. But these profit levers, really the reason I teach them is to illustrate that you're the control room operator. You can go in and make a ton of different decisions that are going to impact your bottom line. And they don't have to be huge. It doesn't have to be massive overhauls. Small tweaks can really add up to big differences. That's the amazing thing about numbers. If you are a person that plays around in numbers, you'll realize little 2% tweaks on each of these different levers all of a sudden somehow add up to sometimes more than doubling your Operating profit. Numbers are amazing that way. So it's really key that you know you have that control and you need to claim it though. If your business feels and your finances feel like they're happening to you, that's not the control. You need to step into that control room and say, okay, I'm going to intentionally make some decisions. And even if they're not the exact right decisions, right? First of all, there is no exact right decision. There's not just one, there are a million different paths you could take. So it's okay to experiment. But just by the act of saying, I am taking ownership of this, I can make these shifts myself and I can do this, it's going to make all the difference. And it's going to encourage you to do it more and more as you see the fruits of that labor. ([Time 0:40:33](https://share.snipd.com/snip/2bab994d-67b2-40a7-9a2e-6aa81b8ae4c1))