It’s tempting to celebrate rising sales. But revenue alone doesn’t tell the full story. What really matters is how much profit you keep once costs are covered. Monitoring your profit margins regularly helps ensure your business is truly healthy, not just busy.

When margins are strong, you get stability, breathing space, and the freedom to reinvest or take a proper owner’s draw. If margins are creeping down, it often starts quietly. A rising software fee here, extra overheads there, until before you know it, profits vanish even though turnover looks healthy.

Step 17 is all about watching your margins. Costs rise quietly. Subscriptions go up. Overheads creep in. If your prices don’t change, your margins shrink.

Why Profit Margins Matter

Profit margins show whether your pricing and cost structure are working. They help you spot when costs are creeping up, when overheads have grown too heavy, or when pricing no longer reflects value. With good margin control, you:

• Avoid wrapping up busy periods only to end up under water
• Know which services or products genuinely deliver value, and which drain resources
• Make smarter decisions about pricing, costs, and expansion
• Build a buffer that shields you from uncertainty or slow months

In other words, margins help you stay sustainable and in control, not just afloat.

Understand True Costs And Price Accordingly

A healthy margin starts with knowing what everything costs. That means more than direct costs or materials. Include overheads, staff salaries and benefits, pension, National Insurance, software, rent, utilities, training, admin and everything needed to run your business properly.

If you don’t account for the full cost of delivering a product or service, you risk underpricing and eroding your profitability without realising.

Once you know your true cost base, set your prices based on facts, not guesses, hope, or what 'everyone else' charges.

Review Pricing Regularly, Because Costs Change

Prices that worked last year may not work now. Inflation, rising utility bills, higher staff costs, or increased supplier prices all chip away at margins over time. If you leave prices static, your profitability slowly shrinks.

That’s why it’s wise to revisit pricing at least annually, or any time costs jump significantly. Doing so helps you stay competitive, cover rising costs, and avoid margin squeeze.

Track Time and Output, Especially in Service Businesses

For service-based businesses, time is one of your biggest resources. If you don’t track how long tasks actually take, versus how long you think they take, you may underprice or undervalue what you do.

Accurate time recording helps you:

• Spot tasks or clients that overrun
• Identify inefficiencies or areas that need updating
• Price realistically, based on real effort
• Plan workload capacity and avoid over-committing

When you combine time tracking with full cost calculation, you get a full view of what’s profitable and what’s not.

Get the Business You Want

Profit margin management isn’t glamorous, but it’s essential. It’s the difference between a business that grows, and one that spins its wheels. Keeping margins healthy means you retain control, stay resilient, and protect your long‑term success.

Use Step 17 of the Plan, Profit, Prosper planner to review your costs, pricing, and margin today.

If you’d like a fresh set of eyes on your numbers, or want help benchmarking margins for your industry, get in touch. We’re here to help you build a business that works for you.

Start today: Download the planner and take Step 17 now