Understanding ratios is vital to unlocking deeper insights into what you are promoting’s health and driving smarter decision-making
Imagine you’re a farmer with two apple orchards. At some point, you select to count the apples in each orchard. Orchard A has 1,000 apples, while Orchard B has only 500. At first glance, it looks as if Orchard A is the clear winner. But what if I told you that Orchard A has 10,000 trees, while Orchard B has only 500? Suddenly, Orchard B doesn’t look so bad, does it?
That is the ability of proportions. In business, as in farming, raw numbers may be deceiving. To actually understand the health of what you are promoting, you have to take a look at proportions.
You might be probably taking a look at absolute numbers each day, e.g. what you are promoting has made $10K in revenue this week. There are 250 customers who placed orders today, while it was 200 yesterday and 100 on the identical day last week etc.
Proportions, alternatively, are just like the positive print. They won’t be as immediately eye-catching as absolute numbers, but they supply a more accurate picture of what you are promoting’s health.
Take profit margin, for instance. This can be a proportion that compares your profit to your revenue. A high profit margin indicates…
