profit-squeeze

profit-squeeze

A company faces a profit-squeeze due to rising material costs.

Definition

Noun: A situation in which a company's or industry's profits are reduced or "squeezed" between rising costs (such as wages, materials, or energy) and falling or stagnant prices for its products. The term describes a financial pressure that narrows profit margins.

Usage Examples
  • (A situation where profits are being compressed from both sides.)
  • (The consequence of reduced profitability.)
Advanced Usage

  • "to be caught in a profit-squeeze": to be unable to avoid the pressure on profits.

    • Many small retailers are caught in a profit-squeeze between rising rents and falling foot traffic. (They are trapped between two opposing financial forces.)

  • "profit-squeeze effect": the economic impact of such a situation on an industry or economy.

    • The profit-squeeze effect has led to a wave of mergers as companies seek economies of scale. (The result of the squeeze on profitability.)
Variants and Related Words
  • Squeeze (v/n): to press or compress; in finance, a period of financial difficulty.
    • The company is trying to squeeze more profit from its existing operations. (To extract or force out.)
  • Profit margin (n): the difference between revenue and costs, expressed as a percentage.
    • A profit-squeeze directly reduces profit margins. (The key measure of profitability.)
Synonyms
  • Margin compression: a reduction in profit margins.
  • Cost-price squeeze: a specific type of profit-squeeze where costs rise faster than prices.
  • Profit erosion: a gradual reduction in profits over time.
Related Idioms
  • Between a rock and a hard place: in a difficult situation with no good options (similar to being caught in a profit-squeeze).
    • The firm is between a rock and a hard place with its profit-squeeze. (It must choose between bad alternatives.)
  • Squeezed from both ends: under pressure from two opposing forces.
    • The industry is squeezed from both ends by rising input costs and falling demand. (A description of a profit-squeeze.)
Phrasal Verbs
  • Squeeze out: to force out or exclude, often by pressure.
    • The profit-squeeze is squeezing out smaller competitors. (It is forcing them to exit the market.)