Six Step Profit Formula
The Six Step Profit Formula walks from who you sell to, through what you charge and spend, to what you actually keep, treating profit as something built through six deliberate decisions rather than a number that turns up at year end.
The sale sits at one end and profit at the other, six decision boxes strung between them.
Reach for this when…
- Revenue is climbing but the profit line refuses to follow it.
- You've never actually mapped where the margin gets lost between sale and bank account.
- Everyone in the business can describe the product; nobody can describe the profit plan.
How to run it
- Identify the target market precisely enough that you know who you're pricing for.
- Build a value proposition strong enough to support the margin you need.
- Choose marketing that reaches that market without eating the margin you just built.
- Optimise the sales process so fewer deals leak out at the final step.
- Manage costs deliberately rather than trimming wherever's easiest.
- Monitor the actual numbers and adjust the weakest of the five steps above.
A worked example
Situation. Camila Silva ran Clinica Silva, a small physiotherapy clinic in Recife, Brazil, whose booking numbers were rising every quarter while the owner's take-home stayed flat.
Applied. Working through the six steps, she found the value proposition was fine and marketing was working; the leak was in the sales step, too many enquiries never converted to a booked, paid session.
Result. She fixed the booking process, cutting the gap between enquiry and paid appointment from days to hours. Revenue barely moved but profit rose within the quarter, because fewer enquiries were leaking out.
The catch
Treating profit as six discrete steps can hide the fact that they interact hard - a marketing change that grows the target market can quietly break the cost step by adding delivery load. It's a checklist for structuring a conversation about margin, not a substitute for real cost accounting.
Rising revenue and flat profit means the leak is in one of the other five steps. Find it before you spend more on the one you can already see.