--- title: The Profit Lever Every CFO Should Be Using description: "Learn about the often-overlooked profit lever every CFO should be using now and in the coming year. Hint: It’s not about cost-cutting." image: https://4864103.hs-sites.com/hubfs/Hero%20Images/hero-shift-lever.jpg --- - [ Hospitality ](https://www.revenueanalytics.com/hospitality/n2pricing) - [ Manufacturing & Distribution ](https://www.revenueanalytics.com/md/pricing-as-a-service) - [ Private Equity ](https://www.revenueanalytics.com/md/pricing-as-a-service) - [ Media ](https://www.revenueanalytics.com/media/rateoptics) - [ Passenger Rail ](https://www.revenueanalytics.com/rail/farevantage) [ #### N2Pricing™​ The above-property RMS. ](https://4864103.hs-sites.com/hospitality/n2pricing) [ Hotelier Gets the Pricing Power it Needs to Beat the Competition ](https://4864103.hs-sites.com/hubfs/Case_Study_Hotelier_Gets_the_Pricing_Power_it_Needs_to_Beat_the_Competition.pdf) [ #### Pricing-as-a-Service™ Profitable pricing decisions at scale. ](https://4864103.hs-sites.com/md/pricing-as-a-service) [ Packaging Giant Slashes Deal Cycle Time 69% & Boosts Margin 4% ](https://4864103.hs-sites.com/hubfs/Case%20Stories/PAPA/Packaging%20Giant%20Uses%20Price+%20to%20Slash%20Deal%20Cycle%20Time.pdf) [ #### Pricing-as-a-Service™ Precision pricing for industrial portfolio companies. ](https://4864103.hs-sites.com/md/pricing-as-a-service) [ Does Your Portco Have a Pricing Problem? ](https://www.revenueanalytics.com/resources/pe/does-your-portco-have-a-pricing-problem) [ #### RateOptics™​ Modern ad pricing and sales analytics. ](https://4864103.hs-sites.com/media/rateoptics) [ Sales Managers Get Their Valuable Time Back at Top Radio Broadcaster ](https://4864103.hs-sites.com/hubfs/Case_Study_Sales_Managers_Get_Their_Valuable_Time_Back_at_Top_Radio_Broadcaster.pdf) [ #### FareVantage™​ Next-gen Revenue Management for Passenger Rail. ](https://4864103.hs-sites.com/rail/farevantage) [ Rail Operator Exceeds Revenue Goals and Lofty Customer Expectations ](https://4864103.hs-sites.com/hubfs/Case_Study_Rail_Operator_Exceeds_Revenue_Goals_and_Lofty_Customer_Expectations.pdf) # The Profit Lever Every CFO Should Be Using Jared Wiesel At any point in time, smart CFOs have one, if not many, cost-cutting initiatives underway. And because of the challenges of COVID, cost-cutting is becoming a necessity. Why? ## **Chiefly, Profit = Price – Cost** A ground-breaking study by McKinsey, published in the Harvard Business Review, found that a 1% improvement in variable cost yields operating profit improvement of 7.8%. ![graphic-profit-lever-1](https://4864103.hs-sites.com/hs-fs/hubfs/Revenue_Analytics_Early2019/Blog/graphic-profit-lever-1.png?width=1986&name=graphic-profit-lever-1.png) And a 1% improvement in *fixed costs* returns 2.3% improvement. ## **Cost: The Go-To Profit Lever** Not only that, there’s always (theoretically) room to improve cost. Plus, low cost is a competitive advantage. Also, when economic uncertainty abounds, cost feels safe to focus on. You can measure cost, you can exert control over cost, you can rein it in and stomp it out. And executed correctly, cost-cutting initiatives can yield strong ROI. ## **A Much Bigger Lever** But, what if there was a bigger lever you could pull? Let’s go back to the profit equation: **Profit = Price – Cost.** What about price? For most companies, price receives far less attention. And yet it’s price, and not cost, that is the single biggest profit lever you can pull: ![graphic-profit-lever-2](https://4864103.hs-sites.com/hs-fs/hubfs/Revenue_Analytics_Early2019/Blog/graphic-profit-lever-2.png?width=1765&name=graphic-profit-lever-2.png) A 1% improvement in price creates operating profit improvement of 11.1%. That’s a huge lever. Pull it correctly and you could see big returns. The challenge is most companies don’t know where to start to address their pricing, or can’t handle the scale and complexity of their pricing to make wholesale changes. Enter Pricing-as-a-Service—our suite of prescriptive analytics engines has everything you need to set the right price for every deal, and take the right price increases over time  and deliver significant profit gains. [Book a Pricing-as-a-Service demo](https://4864103.hs-sites.com/md/demo/pricing-as-a-service) now and take the first step to pulling the most meaningful lever.   ### Jared Wiesel Jared Wiesel is a Senior Vice President at Revenue Analytics. In this role, he serves as the practice area lead for Manufacturing and Distribution. Jared has led and executed project work across four continents with experience in multiple industries including retail, consumer goods, automotive, manufacturing, amusement and entertainment, freight, and specialty services. Jared Wiesel is a Senior Vice President at Revenue Analytics. In this role, he serves as the practice area lead for Manufacturing and Distribution. Jared has led and executed project work across four continents with experience in multiple industries including retail, consumer goods, automotive, manufacturing, amusement and entertainment, freight, and specialty services. × ## Get the latest resources By signing up, you agree to our [Privacy Policy](https://www.revenueanalytics.com/privacy-policy). ## Recommended Reading [ View more resources ](https://www.revenueanalytics.com/resources/md) [ Case Study Price+ Pushes Profits up 11.5% for Global Parts Leader Global Component & Parts leader drives 11.5% margin uplift through segmented, market-based price guidance. ](https://4864103.hs-sites.com/hubfs/Price+%20Pushes%20Profits%20up%2011.5%25%20for%20Global%20Parts%20Leader.pdf) [ Case Study Packaging Giant Slashes Deal Cycle Time 69% & Boosts Margin 4% Fortune 500 Paper and Packaging Company utilizes advanced analytics to streamline the sales process and improve customer experience. ](https://4864103.hs-sites.com/hubfs/Case%20Stories/PAPA/Packaging%20Giant%20Uses%20Price+%20to%20Slash%20Deal%20Cycle%20Time.pdf) [ Video Price Exceptions are the Enemy of Customer Experience The #1 enemy of Customer Experience is the dreaded price exception. Watch this short video to see the impact exceptions have and what to do about them. ](https://4864103.hs-sites.com/resources/md/price-exceptions-are-the-enemy) ## Start selling faster and more profitably today. You didn't create your nightmare price exception process, but it needs to be put to bed. Be the one to revolutionize how your reps price and sell today. [![Connect with an expert](https://no-cache.hubspot.com/cta/default/4864103/dc3589a6-4106-4d48-a9e3-6ab7e7ba210f.png)](https://cta-redirect.hubspot.com/cta/redirect/4864103/dc3589a6-4106-4d48-a9e3-6ab7e7ba210f)