FourEyesSquad

It’s a cliche.  But this is probably what most small businesses can do in this type of economy that we have.  Small business owners have to be different than their competition because cutting their pricing or undercutting the competition is not the way to go. But if there’s a will, there’s definitely a way.  There are still some creative things that you can do in terms of pricing according to a Small Business columnist at My Fox Chicago

• Volume discounts. At a stationery store, one pen might sell for $2.00, while a box of ten could sell for $18. While the per-unit profit margin is reduced by 10% in the box set, the net profit can jump by much more than that due to volume.
• Price floors. If you want your restaurant to attract the type of customers that spend $25 on an entrée, you might not want to price the least expensive meal below $20. Of course, you’d better hire a great chef if you hope to sustain those prices.
• Two-part pricing structure. In this structure there is an initial fixed charge, and a variable charge going forward. For example, look at ink-jet printers - the machines themselves can cost less than $150, but the ink refills cost $50, and you need to keep buying them forever.
• Peak load pricing. As demand for your product rises, you could consider charging more (e.g., if you’re leasing out a beach house on Cape Cod, you can certainly charge a lot more for a summer monthly rental than a winter one).

Being creative is one thing, making classic mistakes is another such as underselling and following the competition which ends up in a gridlock of price competition.  For a business that provides service (oppose to product), there may be times that a customer may demand lower price in the midst of the project.  In these cases, you may need to also change the once agreed service(s) that you were going to provide.

At the end of the day, you can only do so much in the area of pricing.  The next thing you need to focus on is being different.  Consider providing low-cost additional benefits that might allow you to price above the competition: better service, exclusive branding, or a personal touch.  Consider offering technology or internet related add-ons such as free domain names’ registration & renewal or even their choice of web templates from low-cost template sites.

CPC

FourEyesSquad.com provides technical services to all types of businesses. Please contact us for details or call us at 800-406-4522.