Tuesday, 17 April 2012
Raise my prices? You gotta be kidding me!
Don’t be a business owner who is afraid of raising prices.
Good profit margins are what it is all about. Too many business owners are scared to death to raise prices for fear of losing customers. In many cases, competition does make it difficult. But there are many situations if business owners would do some research, they would find out there isn’t as much resistance as they thought. And when they finally raise prices, they find out they lose very few customers and make a lot more money (also increase the value of the business).
Don’t wait too long.
· Check out you competition, have they adjusted pricing in the past 6-12 months.
· Connect with a similar business that operates out of town, what sort of adjustments have they made to their prices
· Do the math, if you are a restaurant owner, have you measured the impact of increases in food costs to your cost of goods sold, if you have vehicles in your business, have you considered how gas prices have impacted your overall expenses.
· Be creative, many businesses have found ways to creatively increase prices through surcharges, add-ons, and value added services.
· Warn your customers in advance. A well formulated letter can help communicate your future increase, plus can provide a marketable point of contact. Who says you can’t offer an incentive to your customers for buying now, versus waiting till prices are higher?
· Do what you say. Raise prices in an orderly fashion, as you have promised. Be systematic; ask for feedback from your front-line staff and customers. You will learn lots from what they say.
· Be patient and track results. In a short time you will realize you have made a good decision, and make amendments where you need to.
Bottom-line, healthy profits margins make business owners more money, and help increase a business’ value. You will make your business more marketable to buyers and increase the likelihood of a successful transfer when the time is right for you to sell.
Do you have small business questions you would like answered about this article or others? Please visit www.VRWindsor.com or call 519-903-7807.William Sivell is a sales representative of VR Windsor Inc., Business Brokerage; his blog appears every Tuesday.