A quick note before we begin

This episode was recorded in March 2026, when Six Figure Safety was my main programme and I was promoting an older pricing toolkit. Those offers, prices and enrolment dates are no longer current, so I’ve removed the original promotion.

The article keeps the full profit-margin argument, including the pricing decisions I made at that stage of the business. I have not rewritten those historical prices to match Momentum because the useful part is the mechanism, how price, demand, capacity, expenses and owner’s pay work together.

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In this episode

Most advice about increasing profit margins gives you two options: make more money or spend less money.

Technically correct. Commercially incomplete.

Before touching either number, I want to know why you want more profit. Do you need another £500 of take-home pay? Is the tax allocation short? Do you want to build a business buffer? Has delivery become too expensive? Or does “more profit” simply feel like something a serious business ought to want?

Different goals require different decisions, and increasing revenue is not always the one that solves the problem.

In this episode, we’re talking about:

• how to calculate profit margin;
• the three ways to increase revenue;
• when raising your prices works, and when it moves you away from the buyer you want;
• how offer pathways increase client lifetime value;
• which expenses to cut and which to keep;
• why return on investment is not always monetary;
• and how to translate “I want more money” into a useful target.

Start with the actual profit-margin calculation

Profit is the money left after business expenses have been deducted from revenue. Profit margin expresses that profit as a percentage of revenue.

The basic calculation is:

Profit margin = profit ÷ revenue × 100

If the business generates £10,000 and has £4,000 of expenses, profit is £6,000.

£6,000 ÷ £10,000 × 100 = 60%

The profit margin is 60%.

That percentage helps you compare the business across months with different revenue. A £6,000 profit on £10,000 revenue is a healthier margin than a £6,000 profit on £20,000 revenue, even though the cash profit is identical.

For tax and statutory accounting, what counts as a business expense, profit or owner payment depends on your legal structure and circumstances. Use your accountant for the formal treatment. In this article, we are using profit margin as a commercial decision tool, what the business earns, what it costs to operate and what remains available for tax, owner’s pay, reserves and future plans.

A higher margin is not the whole goal

You could improve margin by cutting every expense, reducing delivery, paying for no support and turning the business into something you hate operating.

Congratulations on the percentage, I suppose.

Profit margin matters because of what it makes possible. It may create:

• more reliable owner’s pay;
• room to save for tax;
• business overflow for quieter months;
• money for debt repayment;
• capacity to invest without borrowing;
• or surplus that can eventually support personal wealth.

So ask for the downstream result first.

If the problem is that you need another £500 a month personally, the plan may involve revenue, expenses, tax estimates, salary design or personal spending. If the problem is that the business has no cash buffer, increasing your monthly transfer may make the goal harder even when the accounting profit looks healthy.

“Improve the profit margin” is not specific enough to tell you which lever to pull.

Lever one: increase revenue

There are three main ways to increase revenue in a service business:

1. Sell to more clients.
2. Increase the price.
3. Increase the amount an appropriate client spends with you over time.

Most online-business advice becomes obsessed with the first one. Reach more people, create more content, grow the audience, find more leads.

More clients can absolutely increase revenue. They can also consume the capacity, increase fulfilment cost and lower margin if the offer was not designed for the volume.

You have to follow the sale through the business.

More clients only improve profit when the delivery works

Suppose an offer makes £1,000 per client. Adding five clients appears to create £5,000 of extra revenue.

But what does each client require? Additional contractor hours? Software seats? Custom preparation? More support messages? A new team member? Your Thursday evening?

If five sales add £4,000 of delivery cost and remove the remaining space in your diary, the revenue rose by £5,000 and the profit rose by £1,000. That may still be worthwhile. It is not the same result as “five more clients equals five grand more money.”

Before using volume to improve the margin, calculate:

• delivery cost per client;
• hours required;
• maximum capacity;
• conversion rate;
• number of qualified leads needed;
• and the profit created by each additional sale.

The sales goal should fit the operating model, not bully it.

Raising prices is not automatically the grown-up answer

The second lever is price.

If you are at capacity, demand is strong and you do not want to serve more people, increasing the price may improve both revenue and margin without adding delivery.

Women are often encouraged to charge more because underpricing is common, and yes, people-pleasing, discomfort with earning and a desire to make work accessible can influence the number.

But we do not pull a higher price out of the air, announce it confidently and assume the market must now respect our boundaries.

Price needs to account for:

• the result and value of the offer;
• delivery time and cost;
• the buyer and her financial context;
• the alternatives available;
• market demand;
• your capacity;
• and the profit the business needs.

Confidence helps you communicate the price. It does not make an unsupported price commercially sensible.

I raised my prices and the clients disappeared

At one stage, I was fully booked with around 19 clients and had evidence that the work produced strong results. Raising the price seemed obvious.

Then enquiries dried up.

A business coach helped me see that the new price did not fit the financial reality of the people I most wanted to serve. I tried changing the messaging and moving towards more established, six-figure business owners.

Some of those clients joined, so the repositioning worked commercially. But I did not enjoy the work as much.

The clients I cared most about often had more limited personal income and ambitious goals. They did not need a simpler version of the result. They needed a price and offer model that worked for them and for the business delivering it.

So I reduced the price, first from £5,000 to £3,000, then eventually discontinued that version of the offer.

Lowering a price can be strategic when the previous number moved the offer away from the right buyer or required positioning you do not want to hold. Episode 10 explains that decision in full.

Do not assume what somebody can afford

Your ideal client’s income is relevant to pricing. It is not permission to decide for an individual buyer whether she can pay.

Two people with the same income can have completely different expenses, savings, priorities and appetite for the result. A person taking home £5,000 may have higher fixed costs than somebody taking home £1,500. Higher income does not automatically mean more available cash.

In my client work, I had seen people across a wide range of take-home pay reach similar financial goals, sometimes over surprisingly similar timelines, because the higher earner’s lifestyle and commitments were also larger.

That is an observation from specific clients, not a universal rule.

The practical answer is to test the price honestly. Look at qualified demand, objections, conversion, payment timing and delivery economics. Do not decide everybody is too poor before selling, and do not blame “money mindset” when the market repeatedly tells you the price and buyer do not match.

Increase lifetime value through the next problem

The third revenue lever is client lifetime value, how much an appropriate client may spend across the full relationship with your business.

For a long time, I had one primary offer and no natural continuation. A client could build the financial foundations, then need time before moving into investing or longer-term wealth work. There was no clear bridge between those stages.

I told myself that clients leaving meant I had done my job. Sometimes that was true. Sometimes I was using it to avoid asking whether they wanted support with the next, genuinely different problem.

One client later continued on a retainer for periodic check-ins around financial decisions and blocks. That was not endless dependency. The foundational result had been delivered, and the next form of support solved a different need.

This is what I call a problem pathway.

Map:

1. The first problem the client wants solved.
2. The result your main offer creates.
3. The next problem that naturally appears after that result.
4. The most appropriate level of support for it.

You do not need six offers at six price points. You need to stop ending the client journey because you have never examined what happens after the first result.

Episode 13 goes deeper into bridge offers and problem pathways.

The revenue equation has three parts

At its simplest:

Revenue = number of clients × average value per sale × number of appropriate purchases over time

You can improve revenue by changing any one of those inputs.

The right choice depends on the constraint. If demand is low, a price increase may reduce conversion further. If capacity is full, more client volume is impossible. If clients receive the result and immediately face a related next problem, the pathway may be the strongest opportunity.

This is why “make more sales” is not a strategy. It is one possible lever hiding inside a larger model.

Lever two: reduce expenses

The other traditional route to a higher margin is spending less.

Generic advice stops there, as though the business owner has never considered cancelling anything and needed somebody to reveal the existence of subtraction.

Useful expense work begins with visibility.

List every expense individually. Do not group software into one figure, professional support into another and delivery into a third. I want to see the actual tools, contractors, subscriptions and charges.

No, girl, do not group them.

An £11 subscription looks irrelevant. Ten small subscriptions no longer being used create £110 a month and £1,320 a year. The individual amount can hide the cumulative cost.

Ask what each expense produces

For every recurring expense, ask:

1. Does it directly help create or retain revenue?
2. Does it save enough time to support revenue, delivery or capacity?
3. Does it reduce meaningful risk?
4. Does it create ease or joy that I have deliberately chosen to fund?

The final question matters. Return on investment does not have to be purely monetary.

A tool may make delivery calmer. A coworking membership may get you out of the house and help you work. A designer may make a project significantly easier to complete. If ease, quality or enjoyment is the intended return and the business can afford it, that is a legitimate decision.

Do not pretend the expense is generating sales when it is not. Name the return you are actually buying.

My tiny subscription example

I had a ManyChat subscription costing around £11 a month, and roughly one person a month was using the automation attached to it.

That does not instantly prove the subscription should be cancelled. One person could become a valuable client. The automation could save time. The conversation could matter strategically.

But the cost deserved a question.

Was it creating revenue? Was it saving meaningful time? Could the same result happen without the paid plan? Had I kept it because £11 felt too small to review?

Small expenses are not the enemy. Invisible expenses are.

People-pleasing can become a business expense

One client had spent tens of thousands over several years on an ads manager who was no longer delivering the required result.

She was afraid to end the contract because they had become friends.

The expense stayed because the relationship made the commercial decision uncomfortable. Once she changed providers, she spent less and the advertising performed better.

This is not only a contractor problem. Business owners keep memberships, team members, tools, clients and suppliers because changing them creates an awkward conversation.

The cost of avoiding that conversation continues every month.

Review performance, expectations and fit with evidence. Treat people fairly. Communicate clearly. And remember that paying indefinitely for work the business no longer needs is not kindness.

Cutting expenses has a floor

There is a limit to what you can remove.

The business needs certain systems, professional services, insurance, delivery support and legal or financial infrastructure. Eventually, another cut damages the result or creates more work for the owner.

Revenue has theoretically larger upside. Expenses reach a minimum operating level.

This is why cost-cutting can improve margin quickly but cannot be the entire growth model. A business cannot save its way from £5,000 to £10,000 in monthly revenue.

It can stop leaking the money it already makes while building the route to more.

The real question is what you need the profit to do

After reviewing revenue and expenses, return to the original question.

Why do you want a higher margin?

You want more take-home pay

Calculate the actual monthly amount your life needs. Then work backwards through tax, business savings, expenses and revenue.

Do not assume every pound of accounting profit should become personal pay. The business may need reserves for slower months, annual bills, debt or future investment.

You are not saving enough for tax

Check whether the current tax allocation matches a reasonable estimate for your structure and circumstances. Do not raid the tax money to make the salary look sustainable. Speak to an accountant or qualified tax adviser for your actual liability.

You want a larger business buffer

Set the target and deadline. How many months of essential expenses or salary should the business hold? What monthly overflow will build it?

You simply want “more money”

More for what?

If there is no number, purpose or timeframe, the goal cannot guide a pricing, sales or spending decision. Additional revenue can arrive, become absorbed by additional spending and leave the same feeling untouched.

Define enough, or every number will feel temporarily inadequate.

Check whether you are taking too much from the business

Some owners underpay themselves. Others transfer almost everything left after tax and call it salary.

The business then has no retained cash for quieter months, annual expenses, debt repayments or reinvestment. One strong month creates a larger personal transfer, and the next quiet month creates panic.

Paying yourself matters. Draining the business until it cannot continue paying you does not improve the arrangement.

Set owner’s pay from what your life needs and what the business can sustainably produce across multiple months. Use overflow to smooth the difference between high and low revenue periods.

Episode 3 covers how to pay yourself consistently, while Episode 6 explains how overflow protects that pay.

A smaller income can still make meaningful progress

During my own earlier financial journey, I built my first £5,000 emergency fund and paid off around £10,000 of debt within a year while taking home less than £1,500 a month.

That is a personal example, not a universal promise. My expenses, household and circumstances shaped what was possible.

The point is that the progress came from knowing where the money needed to go. A larger income would have made the goal easier, obviously, but an undefined goal would have allowed a larger income to disappear too.

Money management cannot compensate forever for inadequate income. It can make the current income considerably more useful.

Every little helps. Christ, I sound like Tesco.

Turn the profit goal into a number

Replace “I need a better margin” with a calculation.

Perhaps you need:

• £500 more monthly owner’s pay;
• £1,000 a month into business overflow;
• £600 for tax;
• or a 65% margin to make the current offer worthwhile at capacity.

Then test the available levers:

• How much additional revenue is required at the current margin?
• Can price increase without moving the offer away from the buyer?
• Can client volume rise within capacity?
• Is there a valid next offer in the client pathway?
• Which expenses no longer create an intentional return?
• Is owner’s pay calibrated to a sustainable average?
• Are tax or reserve allocations too low, or unnecessarily high for the current goal?

The right plan may use several levers at once. A modest price increase, one cancelled subscription and a more profitable continuation offer may solve the problem with less risk than trying to double the audience.

A profit-margin review in seven steps

Use this sequence rather than beginning with random cuts.

1. Calculate the current margin

Use revenue and business expenses for a representative period, not the best month of the year.

2. Define the desired outcome

Name the exact amount required for pay, tax, reserves, debt or investment.

3. Review profit by offer

Identify which offers create margin and which consume capacity without enough return.

4. Review the three revenue levers

Test client volume, pricing and client lifetime value against demand and capacity.

5. List every expense

Assess financial return, time saved, risk reduced, ease and joy. Cut what creates none of them.

6. Model the downstream effect

Check what the proposed change does to delivery, tax, owner’s pay and overflow.

7. Choose the smallest effective change

Do not rebuild the entire business because the margin needs three percentage points. Pull the lever that addresses the diagnosed gap.

Profit should fund something real

A higher margin is useful when it changes what the business can do.

It can pay you reliably, protect a quieter season, allow a thoughtful investment, reduce debt or begin moving business success into personal wealth.

The percentage is evidence of the model. It is not the reason the model exists.

Know what enough costs. Build the revenue to support it. Keep enough of that revenue for the result to reach you.

Continue listening

How People-Pleasing Is Killing Your Business Profit

Want to improve the margin without guessing which lever to pull?

Inside Momentum, we look at the full commercial model, revenue target, offer profitability, pricing, capacity, sales system, cashflow and owner’s pay, so increasing profit creates a business that pays you more rather than another target floating around in a spreadsheet.

Apply for Momentum, and we’ll design the revenue around what the business and your life actually need.