For over 10 years, this award winning Blog has been a Forum where Australian Small Business Owners can exchange Ideas and Advice with experts in Australia on how to Improve their Businesses through better Business Management, Planning & Strategy, Business Management Systems and Marketing Strategy.
Our Ultimate Objective is to help Australian Business Owners Make their Business Run without Them and to achieve their Goals where ever they may be in Australia.
Below is a recent interview of Dr Greg Chapman on BTalk on a new set of benchmarks for small business published by the ATO. In this interview Dr Chapman describes how to use them for your business.
Would you like to win $6,000 worth of prizes? These are not Mickey Mouse Prizes …these are prizes of real value for your business and for you personally. But you have to be in it to win it!
I would like to invite you to celebrate the Launch of the new Marketing Communications Executives International (MCEI) website with me and be a winner!
Members of this dynamic network of entrepreneurs have got together and are offering these great prizes. Some will require a draw to pick the lucky winner, but many of them will be available to everyone who takes part.
Barbara Gabogrecan (the President) and Peter O’Connor (the Treasurer) have put this site together to provide information, training and a portal from which members can promote their own product and services and network with each other via the Members Directory and the Forum. It is so pleasing to see the interest already being generated from this site – even before the Launch. Members are definitely the winners as the Members Directory pages are the most visited pages on the website.
A couple of months ago, Steve Jobs launched the iPad. Before the launch, the big question was how much to charge for it. The major existing brand digital reader, Kindle was priced at $259. Apple believed the iPad was superior technology and so should have a higher price. But how high? The answer was as high as their marketing can push it!
They decided to charge $499 for the basic model – almost twice the cost of a Kindle. The only question was how to justify it.
At the launch, before touching on price, Jobs spent a lot of time discussing the benefits and the superior features of the iPad. Only after that did he start talking about price. Look at the video below. He starts talking about price at 1:35 in the video clip. (Note this is an edited version of the launch provided by a news service.)
Notice when he starts talking about price, the price on the screen behind him is $999? This is called “anchoring”. He then goes on to talk about how they have been able to contain the price, but for a full 20 seconds, $999 stays on the screen. Then at the appropriate moment, the true price appears with great fanfare as a massive price reduction. So now everyone feels if they buy the iPad, they have just saved themselves $500, not that it is $240 more expensive than the Kindle.
Jobs then goes on to explain what the extra features cost. So now you compare everything to the base price of $499, clearly reasonable compared with the $999 anchor, and you are just considering which features you want in your iPad. That is the discussion is about scope not price.
You have just witnessed a Master Class on pricing. Notice that the product price is completely detached from the production costs enabling Apple to achieve high margins.
Will these margins be sustainable? In the medium term yes, while demand remains, but it appears that Kindle is likely to reduce their product to $149 putting pressure on the iPad pricing. However, it would appear that the Kindle does not have all the technology that the iPad contains, so the margin will remain justifiable. In the longer term there will be clones with similar technology that will erode the price, but with its well established brand, Apple will always be able to maintain a higher margin than its competitors.
Are you able to create an anchor for your prices?
May Your Business Be - As You Plan It.
Over to You. What do You Think? Post Your Comments Below.
The Minister for Small Business Dr Craig Emerson has written a good article describing the economic basket case that is California, where their public service is paid with IOU’s. Yes seriously. Silicon Valley and Hollywood pay their public servants with IOU’s. How can they do this? They expect that the rest of the US will bail them out, just like Greece expects the EU to bail them out – a giant Ponzi scheme. (Greece expects Germany to increase their retirement age from the current level of 68, so they can continue retire at 58 and receive 14 months pay every year. What can possibly go wrong with that plan?)
Of course that’s Greece. But what about the Californians – don’t they own the internet? California has got to the point where increasing taxes just turns their most productive entrepreneurs into boat people. So the government instead increases regulation with a multitude of permits required to operate a business. Of course each permit requires a fee – a hidden tax that is ultimately passed onto the consumer. So why would you set up a business in California if you can provide a similar service over the internet, immune from the Californian regulation shakedown. California has reached a tipping point where they are all service without productive economy. (You can’t afford to produce anything there.) A service economy cannot exist without production somewhere in the chain. Which is why the public servants in California receive IOU’s.
Australian, on the other hand, is third OECD in the shortness of time it takes to start a business. Dr Cameron is right, for most businesses it is pretty easy. He also goes on to say that he wants to keep it this way. I believe Dr Emerson is passionate about small business, and I congratulate him for writing this article, and I want to be fair and show the other side after my earlier post on Does the Australian Government Hate Small Business?
Dr Cameron warns against “Californian Dreaming”. While I believe Dr Emerson means everything he says, it is some of his colleagues I am more concerned about!
If you have any comments on small business regulation in Australia, good bad or ugly, please share them in the comments section below.
May Your Business Be - As You Plan It.
Over to You. What do You Think? Post Your Comments Below.
