Do you need to review your pricing?
Has your price stayed the same ever since you have been in business? How is that working for you?
The cost of everything goes up so why shouldn’t your prices? If your prices have been static for some time it might be time to review them. A subtle price increase can add a significant boost to your bottom line. By the same token maybe the market has changed and your prices need to come down!
Research can help you find if you can increase your prices. Generally, the optimum price rise is one that your customers are willing to pay, without it affecting your profits. If you put your products up by 5% or 10% how much more money do you make per unit vs how many customers you may lose. Crunch the numbers to see.
Can some products take more of a price hike than others? Do you have a product or service that can be your ‘loss leader’, that it, a product you sell at a lower profit margin but people consistently buy that product with something else that has a higher profit margin? Securing the first interaction and gathering loyalty can cost money – would a loss leader strategy work for you?
If you’re not sure if your customers will cop a price increase you should perform some form of market testing. Analyze current customer behavior and see if you can find any spend patterns. Maybe offer some limited addition products with a higher price to test market sensitivity.
Do your prices need to come down? Are you and your competitors achieving increased competition and better economies of scale and the expectations of consumers have changed in relation too your products and services?
Review your competitors – is your market position still relative to theirs from when you developed your business plan?
Pricing isn’t a one-off activity, you must monitor your key pricing influences regularly as part of your overall market research to ensure your prices stay competitive and you still meet your customers’ expectations.
How often do you review your pricing?
