| |
| |
|
Small Business Information |
|
|
|
How to Raise Your Fees and Thrill Your Customers
Think the best way to get more customers is to have the lowest prices in town? Think again. Think the best way to create a successful business is to try to appeal to everyone? Wrong again. The only good thing about having the lowest prices and trying to appeal to everyone is that you'll fail quickly and be out of your misery. This is a really hard concept for many business owners to come to grips with. Small business owners can really struggle with pricing. There are tons of different approaches to pricing and that in itself creates plenty of confusion. It's been my experience that most small business owners tend to undercharge for their services and products. Feelings, Nothing More Than Feelings The bottom line is this. People buy for emotional reasons-not price. People buy from you because you solve a problem for them-not price. Yes, for some people price is the deciding factor for purely economic reasons. But how many times have you seen someone skimp on necessary car maintenance but spend big bucks on a car stereo? People will pay ridiculous amounts of money if they perceive high value. Visit an antique shop-why would you pay tons of money for an Early American kitchen chair when you can get a brand new chair for $30? Listen, I've been watching the human species for decades and I've come to a conclusion-we're a really weird group. We're gifted with a magnificent intellect, the ability to reason and approach things in a logical manner. And yet, we make our decisions based on emotion! How else can you explain someone with 350 pairs of shoes or 35 antique cars or every Barbie doll ever made? We're just a bizarre species! Once you realize that, it makes raising your prices easier! Of course, it's a little more complicated than that?so let's talk about some pricing strategies. Cost + markup If you make a product, you can price it by taking what it costs you to make it-materials, labor, and overhead and add on a markup percent for profit. If you deliver a service, you can price the service by taking what it cost to deliver the service-labor, overhead and add on a markup percent for profit. If the costs increase, you can raise your prices or reduce what you get for profit. That's a very common approach to pricing. The profit markup can be very small or it can be very large based on other factors. Competitive pricing Survey your competitors to find out what they're charging then charge a similar amount. Lowest Cost Provider "We have the lowest prices in town" is often followed by the "going out of business" sale pricing. Unless you have Wal-Mart's wallet, systems, and bargaining power, this is a recipe for poverty. Value Provided Your pricing in this method is based on the value that your customer perceives you provide them. This is a popular pricing strategy. In my opinion it has a major flaw. Let's say your beloved child has cancer. What value do you place on the doctors, nurses, therapists, etc. who provide care? All the money in the world is not enough to compensate for the value of a cure for your child. The value you perceive and the amount of money you can pay are often widely divergent. In the consulting arm of my business, my customers often tell me that the value I bring to their businesses far outweighs the amount of money they can afford to pay me. The "What do I need to make?" pricing model If you need $40,000 to pay your own bills, can your business generate enough sales to net you that amount? How can you structure your pricing to make that happen? This is a more realistic approach to pricing. If you start out with a baseline-a goal-and work backwards you often get a better feel for what you have to charge to stay in business. This is the same as breakeven which we talk about in a different section of the manual. The downside of this approach is that it limits your income-which means that instead of achieving prosperity from owning a business, you're only creating a job for yourself. The "What do I want to make?" pricing model Now we're getting somewhere. Self employment should do more than create a job for you. It should build value. Most small business owners who survive long enough to want to sell their businesses are dismayed to find that the business has little value. No assets. No transferable brand. No saleable systems. Not retirement. It's merely provided them with a living for a time. This pricing model takes a long term view of your business. Where do you want to be in 5 years, 10 years, 30 years? What are the opportunity costs involved? If your business takes three years before it supports you, what is the cost to you in salary or wages that you could have made working for someone else? Pride of ownership is a wonderful thing, but find ways to make what you own more valuable in the long run. Knowing where you want to get to gives you the opportunity to work backwards to see how you can get there. Personal Pricing Strategies One of my colleagues has a pricing model that she finds works very well for her. She talks to her potential clients about a project. Then, she sits down and thinks about the project, what it will entail in terms of time and energy. She decides on a price, takes a deep breath, and adds a thousand dollars to it. Only then does she call the client with the price. She knows that if she doesn't do this she will under price her services. (And yes, she's very busy and successful.) Another colleague changed her pricing strategy after giving birth to her first child. She looked at her baby and said, "What is it worth to me to miss time with my baby?" She prices accordingly. Another colleague looks at each customer and decides what she will charge based on the level of difficulty she feels the customer will present. Some customers are so difficult to work with that no amount of money in the world would compensate for the wear and tear. Other customers make her feel that she'd work for them for free (she doesn't) because they're so great. Another business takes the approach that they're the best at what they do so they charge premium prices. They back that up with great results and continual focus on what makes them better than the rest. In short, there are any number of pricing strategies you can use in your business and any number of ways to justify those prices in the market place. Caroline Jordan, MBA helps self employed professionals earn what they're worth, attract customers they enjoy, and increase their income. For more tips and strategies for working "ON" your business, not just "IN" your business visit: http://www.TheJordanResult.com/mastering.html.
MORE RESOURCES:
Small-Business - Google News |
|
|
|
RELATED ARTICLES
Mobile Truck Washing, Case Study Most folks in the pressure washing business are happier to do business cleaning concrete or flat work, because it appears to be easy. Some do both fleet truck washing and concrete, which makes sense. Hosted PBX, Is It Right For You? "Order Now!" "Your Business Will Fail If You Don't Have This New Technology!" "Your Competition Has This Tool, Why Don't You?" Does any of this sound familiar? Does it make you cringe? It seems to be impossible to keep up with all the new trends in business today. It's hard to know which trends are just flash in the pan gimmicks and which are valuable tools that your business can actually benefit from. Build Credibility, Value, and Trust on a Shoestring Setting priorities in your business? Your first job is to sell. Selling is - writing the orders; receiving the cash; feeding the beast. The Responsibility Conundrum - Where art Thou? Mr/Ms, 'not me' is often on holidays in your business. Yes come rain or shine they attend the workplace and put in the day for you; coffee to drink, gossip to catch up on, spying on management and colleagues, frequent toilet breaks, long lunches, long phone calls and let not forget the email needs to be checked and replied. Survival Tips For Your Small Business No matter type of business you operate you've got to know how to keep your business alive during economic recessions. Anytime the cash flow in a business, large or small, starts to tighten up, the money management of that business has to be run as a "tight ship. Get Free Payroll Forms Download from the Internet Having a successful business means also having a good working relationship with your employees, and nothing more makes it sour than having problems with the payroll. You can't expect them to work gratis, employees expect to be paid and compensated fairly. Do Your Best; Hire the Rest One of the hidden perks of raising six children is the learning laboratory it provides for the parents. My wife and I have learned how important it is to teach our children to do things for themselves and become problem solvers. Questions to Ask as Your Business Grows Here are some of the questions that you need to ask yourself regarding various areas of the business before you start your growth push. Are you clear on the goals of your business? Are your managers and other staff also up to date with these goals? Does your accountant or other adviser know what you are planning? Have you developed a business plan which brings into play the whole area of growth, which includes the resources that will be required of it? Have you assessed the performance of your marketing and advertising sections and if so, are these adequate? Have you put in strategies to get repeat sales? Are you clear about your competition and what you need to do to win when you start expanding your operations? Are you confident about your current advertising plan, including whether you have identified your target market and also the methods by which you will reach that market? Have you put in place policies for your employees? Do you feel you have loyal and productive staff? Have you put in place strategies for motivating your employees? This could include a system of extra remuneration or some other way of acknowledging their efforts. Is Your Business Property Safe and Secure? Security Professionals provide the products and services necessary to create a safe and secure workplace for you and your employees. Products such as lever hardware, panic and exit devices, desk locks and high security key control systems, as well as security boxes and safes, can help you protect your business and property. Corporate Shells A corporate shell could be liken to a house that had been occupied by a family, prior to the family moving out it was a home. But now it is just shell, a skeleton a plain house with nobody in it, but if a family was to purchase the house and moves in, it becomes a home. Starting a Small Business: Balancing Risk and Reward In a perfect world, starting a small business would be risk free, but just as with everything else; the degree of risk determines the value of the reward.According to the National Commission on Entrepreneurship, at any given time, 6% to 9% of the United States adult population is involved in planning for a new business. Five Simple Software Tips for Small Business Owners The start of a new year is a time for a clean start. Resolutions are made, you clear your files of last year's paperwork, and you swear you are going to start the year off keeping your financial house in order. The Types of Skip Trace Accounts First, we need to define the different kinds of skip trace. There are three basic types of skip trace accounts, they are:The Typo AccountThis account is really not a skip trace account. The Number of Pages in the UFOC in Franchising is Still Growing Today Today required franchise disclosure documents are over 200 pages generally. How many pages do you think the Uniform Franchise Offering Circular; UFOCs were 35 years ago for these ten-foot tall pillars of the franchising community like Kroc, Monhan and Rosenberg founded their companies? They were of course the founders of McDonalds, Domino's Pizza and Duncan Donuts. Serious About Writing A Business Plan... Start A Business Plan Library Tap these treasures of ideas. The best money you can spend is money invested in your business plan education. How Do I Choose The Right Business Opportunity For Me? First you have to start with knowing your budget and how much you can afford to spend on a business opportunity. There are ways of starting a business opportunity online for as little as $50 as an affiliate; this figure goes all the way up to $1 Million dollars with a McDonalds restaurant. Window Cleaning Business Start Up Should you buy a business opportunity or Franchise if you want to get into the window cleaning business? Or just start your own and work hard; grow the business into a full-time profession and expand from there? Let us talk briefly about window cleaning franchises is in general.One could argue without too much difficulty that buying a window cleaning franchise is simply a waste of money, after all you could simply go down to be 99 cents store and by a bucket 3 towels and a squeegee and hey, you are in business right? Well one could argue that, since to really be in business, you probably need to get a business license, insurance, buy some business cards and make a few flyers. Small Business Secrets: Self-Confidence Can Be Arranged At first blush this idea might be difficult to wrap your brain around. That's because you've been taught that self-confidence is achieved through mastery of knowledge or skills. Direct Mail - For Small Businesses We hear a lot of talk about junk mail nowadays. Many people will tell you that they dump it straight in the trash. Selling Your Business, Entrepreneurs Role $elling $elling $ellingWhat makes a great sales person? Well, the natural ability to sell defnitely could not hurt. Sales people are a passionate, obviously people oriented, motivated and energetic bunch.
|
|
|
|
|
