While these may be challenging times for businesses, tough times can create opportunities for business owners who are in tune with the unique needs and desires of their community.
Offer the right product at the right price, and you stand to differentiate your business from the competition.
Now may be an opportune time to carefully review your pricing decisions.
Given the challenging economic climate, you might consider offering special incentives or offer to bundle or package your products or services to enhance value for your clients.
Perhaps you could enhance a particular product or service and create a greater demand.
The goal isn’t necessarily to offer the lowest price but to establish a belief among your customers that they are receiving good value from your offerings.
Here are a few important elements to consider when determining the price of your goods or services:
- Competition. Review the local competition (small and large) to assess pricing relative to yours. What is their strategy? Are they catering to a segment of your target market with more emphasis on a specific product or service? If it’s a product-related business, are they seeking to move inventory quickly by lowering prices? What kind of value are they providing relative to your business? By answering these questions, you can obtain a better understanding of how to distinguish your products or services from the competition.
- Business resources. Find resources for business owners in your community, such as chambers of commerce, trade associations or other local business groups, and consider becoming a member. Take advantage of any networking opportunities these groups may provide to gain insight from other business owners about ‘standard’ pricing for products or services similar to yours.
- Client feedback. Feedback from your customers can be a tool to determine the right pricing structure. Consider speaking with them directly or conducting a survey to determine how they feel about the value of your products or services.
- Supply/demand. Pay close attention to local supply and demand. If you are selling a low-supply, high-demand product, for example, you may want to consider incorporating this factor into your pricing and charge a higher, more competitive price.
- Market. Review your local market to determine which items are moving and at what pace. Are the best-selling items more or less expensive? Consider whether your business should carry more items appealing to a large segment of the market or focus more on a specialised sub-segment of the market.
- Cost. When calculating your cost of doing business, consider all of your expenses — such as materials, labour, transportation and other associated overhead costs — then consider how much of a profit margin you are seeking. Would you be able to charge a higher price by distinguishing your business with exclusively tailored offerings, or would your business fare better by seeking volume sales with competitive pricing?
It’s a wise idea to revisit these considerations on a regular basis.
By examining your pricing structure, you may find more efficient processes in which to do business or perhaps learn of new resources that can reduce costs while improving the quality of your products and services.
By evaluating your pricing structure —keeping the evolving needs of your community in mind — and adjusting it to meet the demands of a fluctuating market, you may discover new opportunities, all while increasing sales for your business.
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