Five rules for maintaining profitability

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Here are some tips provided by Frederik Francois, cost managing expert:

• Target the kind of customers and volume you really want.

• Stay away from customers who seem to be only interested in bargaining rates.

• Before offering a rate to a new customer, verify if there are any special procedures involved in serving them that could have an effect on your costs.

• When you propose a rate to a customer, make sure the document states the major factors that motivated that price. Then, instead of just comparing your rate to another carrier’s, the customer will see that your rate is based on serious homework.

• After two weeks of serving a new customer, do an internal follow-up to verify to what extent your cost calculations reflect what it actually costs your company to serve that customer. Keep doing it on a quarterly basis afterwards and adjust as necessary.

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