Mike McKay
September 1, 2026
Margin is the last of the 5 Ways. That’s not an accident. It’s a specific number that tells you the truth about your business. Not how busy you are, not how big your revenue number is, but the amount you actually get to keep.
Growing revenue and sacrificing margin is just working harder for the same paycheck, or worse.
Good news. You don’t have to blow up your whole business to fix this. Margin is a system. Take the right steps, in the right order, and margin improves. Here’s how.
Gross margin vs. net margin. There is a huge difference.
Gross margin is your revenue minus your direct costs. Direct costs are often called variable expenses, and include materials, labor, the stuff tied straight to delivering the job. Your net margin is what’s left after all your other expenses. Rent, overhead, admin, taxes, insurance. All the fixed costs of your business.
If your gross margin looks fine but net margin is ugly, it’s probably not a pricing problem. There is waste somewhere in overhead or fixed costs. That is a different problem with a different solution.
First, know your numbers.
I say this constantly because it’s always true. Revenue is not profit. A business owner who only tracks revenue is flying with no altimeter.
Review your margins, gross and net, monthly. This isn’t a waste of time or busy work. Your numbers are the most critical scorecard for your business. They are where you catch leaks before they’re too traumatic. They also tell you which products, services, or customers are making you money versus which ones are just keeping you busy.
Raise your prices. On purpose.
If your prices haven’t moved in a while but your costs have, your margin is eroding. This happens slowly so most owners don’t notice until it’s a real problem. Your monthly review is where you catch issues like this.
Don’t raise prices by guessing. Well, not always anyhow. Look at your actual costs, review where you’re positioned in the market, and understand the value you deliver. If you solve a real problem for your customers, you have more room to increase price than you think. Value-based pricing isn’t a buzzword. And the market will tell you exactly how much value you create. It will accept pricing or not. That’s the most important value message of all.
Find your highest-margin work and go all in on it.
Not every dollar of revenue is equally valuable. Some jobs bring in sales but hemorrhage money once you account for total cost to deliver.
Break your margin down by product, service, channel, and/or customer segment. Once you know which offers are the most profitable, put your marketing and your best people there. Stop apologizing for walking away from the low-margin work that’s costing you time, energy and money.
Most businesses fall into the same patterns. They have a few core products or offers that bring good, consistent margin. Then they create a long tail of “other stuff” that adds complexity without adding profit. Identify and focus on your high value products.
Margin improves when your team does more with what you’ve already got. That’s it. That’s the whole idea, dressed up in a lot of consulting language most of the time.
Simplify your processes. Find real bottlenecks. Use technology where it saves time. Technology really isn’t about replacing people; it allows you to pay your best people to do high-value work. Not work a system should be doing for you.
For example, if your most skilled, most expensive person is buried in admin work that an $18/hour hire could do, you’re not getting efficiency. You’re burning up your net margin dollars.
And remember, retaining a customer is cheaper than buying a new one. Every time.
Keeping a customer costs less than winning a new one. That’s just math, and yet retention gets treated like an afterthought in most shops. Even though it’s a huge contributor to profit margin.
Figure out who your most profitable customers are. The cold hard math says many customers cost you more than they’re worth. Asking for constant discounts, extra handholding, custom everything. Once you understand that, you can decide where your time and your marketing dollars actually belong.
Make net margin your habit, not a fire drill.
The businesses that keep improving margin are the ones that review it regularly.
Monthly reviews. Regular cost audits. Actuals measured against budget. Every month. Go straight to pricing, supplier costs, labor, and customer/product mix, in that order. If your margin is improving, figure out why, then go do more of that on purpose.
Improving margin isn’t meant to squeeze the business until it stops breathing. It is about making better choices, so your growth becomes sustainable and systematized. And that means it will show up on the P&L.