Let’s Talk Money!
The birds are chirping and flowers are blooming, welcoming another spring.
Do I dare ask … is your bank account budding and blooming as well?
As we turn the calendar to May, we are now passed the stress of income tax season and well into the second quarter of the 2024 fiscal year for many business owners.
Now is the time for an accountability check and to really look at the progress of your business goals and sales goals.
For today’s article, I want to focus on ensuring your pricing strategy matches your sales goals.
If you aren’t pricing your products or services properly, you may not succeed in achieving the sales goals you’re working hard to attain.
I know that choosing when and how to change your pricing can be tricky for a lot of entrepreneurs because there are a lot of opinions floating around that land on opposite ends of the pricing spectrum.
After surveying 25 local small businesses, I want to break down the top five questions that were discussed.
First, it is important that you know why you charge what you charge for what you’re selling. It is important that you do market and industry research to understand what your market and competitors are charging for the same or similar product/service. Do not let another person tell you what to charge as they are not privy to all the behind-the-scenes planning and expenses that go into running your business.
Next, ensure your pricing is clear and not confusing or ambiguous. For online businesses, you can choose to share your pricing on your web site or leave it off and encourage people to contact you. There are pros and cons for both, but this decision is unique to each business. Additionally, clearly explain if tax is included or if it will be added at the time of the sale.
Third, if you are a new business owner, it does not mean you have to charge lower than your competitor or the market standard. Just because your business is new, does not mean you, your products or your services are not valuable. Selling your products or services below market standard devalues you and your brand. People may question the quality of your products or services. They may make negative assumptions that ultimately hurt your business. Additionally, selling your products or services at a lower price does not guarantee a market advantage or more sales. Do your research!
YES - it is 100% acceptable to increase your pricing once per year. People are used to retailers, medical professionals, tradespeople, etc. raising their pricing annually and your business is part of this natural recurring system.
Finally, YES - you should notify your customers or clients that your prices will be increasing either on your web site, social media or your front door. I recommend at least 30 days notice, but 60 days provides your customers with the opportunity to adjust their budget. You should not hide pricing changes nor should you change your pricing more than once per year (unless it is a unique reason). This does not include sales or promotions.
Check out my article next month where I will discuss how to determine pricing for your business, as well as explain when it’s OK to break away from the norm.