Increase Your Profitability Using Overhead and Loads

RFMS has some unique features that have been added over more than 40 years of development, specifically aimed at the flooring industry.

Our challenge is adequately communicating these features to our RFMS clients; often, they only find out about them when they want to see something added to the software, to find out that it’s already built-in and ready for use.

The other challenge is that even if, as an RFMS user, you know about a function, it takes time to understand it and implement it. Time that you might not necessarily have.

Today, I want to show you how RFMS can help you become more profitable with minimal effort.

Overhead Margin - Moving the needle on average GP% is challenging.

I’m familiar with this challenge because we faced it when we had our flooring business. As hard as we would try, it was difficult to increase our average margin.

The RFMS Overhead Margin function allows us to add a margin, unseen by the salesperson, that increases the profitability of each sale. The margin is added to products and services (either or both, but we recommend both).

A common objection is that we don’t want to make our salespeople uncompetitive. We recommend starting with an overhead of 0.05%, and when you see that sales are not affected, you can creep it up. We believe the sweet spot for an overhead margin is between 3% and 5%. Even at 1%, an overhead margin puts $20k on the bottom line of a $3m business.

Loads -Holding on to margin that might otherwise be given away

If we purchase stock, we likely do so because we can buy at a better price than by special order, giving us an advantage in the market. Sometimes, we will be given special pricing on buy-ins for a period. The risk we face is that we sell the product at our usual margin, meaning that the customer benefits more than we do.

Loads give us the ability to think strategically about our pricing. If we purchase stock of a product at $99.00 with a regular cost of $139.00 a metre, we might add a load of $15.00, resulting in a cost of $114.00 for the salesperson building their quote. They can achieve their margin but at a higher cost price, and the customer can still get a deal.

Similarly, if we have a special price for a period, we can add a load to the product record to ensure that we share the benefit of the discount with the customer.

If you are not using Overhead or Loads in RFMS, you are missing an opportunity to make your business more profitable. If you have questions, click here to have us contact you, or call us at our toll-free number.

Chris Ogden is a consultant and Managing Director of RFMS Australasia (rfmsANZ.com), a supplier of IT solutions for the flooring industry. Chris has an extensive background in all aspects of the flooring industry, and he can be contacted at cogden@rfmsanz.com.