Entrepreneur discover how of the 28 million small businesses in America, 21 million lose money. The question that remains why do so many people lose at the game of business? The number one reason businesses fail is, simply due their prices being too low. They do not sell their products at prices high enough, therefore operating on margins so small they are unable to expand. Unless you are extremely well capitalized, you should not attempt to offer the lowest prices in your market. Trying to match or beat others on price is a suicide mission, not a practice. Your business needs increased margins to expand and service customers. Price matters and you must raise yours. The following will help you understand how to efficiently raise your prices:
- Just increase price
You don’t need a reason or justification to raise prices, just do it. Try increasing your prices,even a little, and see if it sticks. If you are scared to raise the price, bundle products and services to increase your average sales price.
- Magic of alternatives
Choices allow the buyer to make sense of the price. When you show the price of a product or service, always offer alternate products or services to make logical sense of price. Provide a higher and lower offer on each side of every offer.
- Menu pricing
Organize your services on a menu with pricing highest to lowest. People believe what they see more than what they hear. I did this in the highly competitive automobile industry. It increased profits $400 per car. Contrary to popular belief, selling your products or services at the lowest price doesn’t make customers more loyal or happier. The customers that cause you the most trouble typically are the one’s who paid the least.
See how Stratinis can endeavour to optimize and manage your prices through our pricing software