15 Aug Is it Time to Revise Your Pricing?
It’s hard to know if it’s time to revise your pricing. Regularly reviewing your products, services and pricing as well as the competition is an important aspect of protecting and growing your business profits. Getting your pricing strategy right is one of the biggest hurdles for any business owner. So… is it time to revise your pricing? Here are six signs that it may be time for a price increase!
You have more work than you can handle
Having a waiting list and managing a back-log of orders may be a sign that you are able to charge more for your products and services. If the demand is there, the market will likely respond positively to a price increase and if your business continues to grow, a price increase can support expanding your team.
It’s important to also consider the impact on you, your team and business if you are continually in a position of over work. Long wait times, rushed through work at reduced quality will impact your business. In this instance identifying and prioritising your preferred services and target customers is important. Your pricing strategy can help you tailor your product mix .
Your Cost of doing Business is Increasing
Every business is subject to the increasing costs of staying in business. In order to stay in business and stay profitable a combination of cutting costs and raising rates is often necessary. With raising employment costs arising from inflation and additional sick leave entitlements any business with significant labour costs will need to review its pricing startegy.
However, just because your costs are increasing does not necessarily mean you can pass on all of these costs. Is your business still cost effective or are there changes to processes or technology that you’ve not adopted. Are all costs necessary or can you achieve better purchase prices? And most importantly, can the market withstand a price increase.
Your Competitors Charge Significantly more than you
Regularly reviewing your competitors is an important aspect to remaining relevant and ensuring that your products and services, quality and pricing is keeping up with industry and market changes.
Pricing is part of your marketing strategy as well as your financial strategy. Whether you have adopted low, mid or high end pricing it is important that your quality is consistent with your pricing, and that a suitable market exists to achieve financial profitability and viability.
You don’t have enough Cash to Drive Growth
If your sales volume is at or near full capacity and you can’t grow your business because you’re strapped for cash its time to re-evaluate your pricing strategy. You should be selling your products or services with enough margin to fund your day to business and sustain business growth.
You haven’t raised prices in a long time
Small and regular price increases are better than large “shock” price adjustments every few years. Whilst you don’t have to raise your prices every year, if it’s been a while since you have it is probably time to at least explore the idea.
There you have it! The only question left to ask yourself: Is it Time to Revise Your Pricing?
Our ‘Is it Time to Revise Your Pricing’ not enough?
The better you understand your business and your financials, the easier it will be to make more money and ultimately achieve your goals. We have developed comprehensive resources to enable business owners to fully understand and interpret their numbers. Need more help? Join our free webinars on financial awareness coaching or talk to us about personalised financial awareness coaching. Contact Samantha for a call, zoom or meet on 06 871 0793.
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