We’ve been sitting down with some of our business owner clients for end-of-quarter planning and evaluation (as well as to get everything in before 9/15). Always enlightening for us here.
And what some of them are telling me is that they have been feeling a rising pressure from their employees, competitors and (less often, ironically) from their clients, to lower prices.
I have been known to weigh in on this topic. And I will do so again…
Venuti Weighs In On Whether To Lower Your Prices
“You get the best out of others when you give the best of yourself.” – Harry Firestone
I discuss this all the time with my business owner clients — how to price their services. You see, often we might hear consumers say, “Well I would buy it if it were in my price range.” And, that idea tempts many business owners or sales people to lower their prices — just to sell more products.
This can be an extremely powerful urge.
However, as you already know, price reductions often create more problems than they solve. I’ve seen too many businesses (my clients) jump down to lower prices without consulting someone objective, only to see their revenues, profits AND business fall.
Here’s some of what you might see price reductions create within your business:
* Decrease of net profits
* Customers rush to the purchase of lower quality products
* Increasing customer demands to drop the price even lower
* Requirement of even more sales to make up the difference in revenue
* Needing a larger quantity of products and inventory to make up for lower margins
And, in the end, there will always be someone willing to go out of business faster than you. And you can’t (nor should you want to) keep up with that.
Remember this: price is not a benefit. The close of a sale is usually not determined on the cost of your product. If you properly “sell” your customers and prospects, they will purchase your products/services no matter what price you determine.
That’s the plain truth — and you’ve probably seen it in your own purchase patterns.
If a customer or prospect doesn’t buy — and they claim the cost had something to do with it — you can guess they probably wouldn’t have purchased anyway.
As a small business owner, and marketer, your job is to sell your products and services. But the actual art of selling has nothing to do with the price of the product.
By the time your contacts find out about the price, they should be determined to purchase no matter what the cost.
So, find “real” benefits (value) to sell to your customers and prospects. Help them to see how great their life is with your product, and you’ve got a customer. Point out their current pain, and your contact will do anything to get rid of it.
Set your prices and hold fast. If you’ve marketed correctly, you will still have customers anxious to do business with you.
If you’d like to sit down and conduct an analysis of your pricing strategy, this is something which we’re very equipped to help you with. Give us a call (610-353-0686) or send me a quick email (click the email button at the top of this page)…
Feel very free forward this article to a Newtown Square, PA business associate or client you know who could benefit from our assistance — or simply send them our way? While these particular articles usually relate to business strategy, as you know, we specialize in tax preparation and planning for Newtown Square, PAfamilies and business owners. And we always make room for referrals from trusted sources like you.
Warmly (and until next week),
Stephen Venuti
610-353-0686
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