MARGIN DIFFERENTIATION

Margin differentiation is a comparison of your margin on price-sensitive sales vs. your margin on incidental non price-sensitive sales. There are three key margin benchmarks to help you determine if you have an opportunity to increase margin on incidental sales. These three benchmarks are 1) the difference in your margin rate based on total customer annual purchases, 2) the difference in margin based on how much a customers spends on an item in a year’s time and 3) the difference in margin based on the frequency of how often an item is purchased by a customer. These benchmarks can provide you insight into your company’s potential to increase margin.

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