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Is It Time to Review Your PRICING STRATEGY?
When business owners want to increase profits, many consider two strategies: 1) Reducing costs to increase profit margins, and 2) Improving sales to earn more revenue and sell more products. While these may be viable options, they carry risks. Reducing costs can diminish the quality of products and services. Meanwhile, selling more can require a significant investment, and it doesn’t guarantee increased profits, especially if you are at capacity and need more staff or equipment to meet demand. There’s another alternative, one that business owners tend to forget or don’t want to consider. It’s changing the pricing strategy.This doesn’t necessarily mean raising prices; instead, it may involve changing services and how you price them. There are several advantages to changing your pricing strategy over the other two options. First, there’s no need to make any expensive investments. Furthermore, your sales team won’t be pressured to perform better. Finally, you don’t risk compromising the quality of your products or services. One example of a pricing modification is known as shrinkation. Brands offer the same product, for the same price, just with less quantity.This helps cut costs, but it can lead to complaints from customers.
government regulations. Nonetheless, the services offered can be enhanced to improve the overall experience of the customer or patient, thereby having a positive ripple effect on the overall business profitability. Loss of Customers Many business owners think that when they raise prices, their customers will abandon them. However, this isn’t always true. Customers will likely remain with your brand even after a price increase if you fulfill other criteria. For instance, if you’ve exceeded their expectations while they’ve used your services, they will prefer to stay with your brand. Likewise, if you offer a unique personal service, this can benefit your business, too. Avoid Customers Abandonment To avoid abandonment from customers during a price structure change, you need to communicate your changes. Don’t focus on the price and don’t explain it. Look at what your customer is getting instead. This type of marketing is more positive and helps to sell your products. The next time you need to generate more profit, don’t look at how you can lower costs or sell more. Instead, look at how you can restructure your pricing strategy and earn more money. This article recently appeared on the Professional Liability Insurance Group’s blog. For more great resources and insight from Shayne Bevilacqua, be sure to visit protectusbetter.com/blog.
Not every industry allows the seller to choose the price. For example, the health care and insurance industries have standards that are set by
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3 Professional Liability Insurance Group • www.ProtectUsBetter.com
Published byThe Newsletter Pro • www.NewsletterPro.com
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