The Australian Small Business Blog

Wednesday, June 23, 2010

Don't be a Price Taker

Possibly the biggest opportunity I see with small business clients I have helped over the years is to increase their prices. It is also the one with which most struggle so they become price takers.

Increasing your prices is a great strategy as in most cases, the extra revenue goes straight through to the bottom line. A 10% increase in prices can double your net profit…. as long as you don’t lose customers. That’s the challenge and fear.

For this reason, my second book, to be released in July will be on how to increase your prices. It is called:

Price: How You Can Charge More Without Losing Sales

Many of the price increase strategies in this book have been tested by large businesses for years and have been proven to work. They have become the inspiration for this book dedicated to levelling the playing field for smaller businesses. While they may be aware of many of them, they probably are not aware of the strategy, planning and implementation that goes on behind the scenes to make them work.

This book contains 57 different price strategies. It lifts the veil on pricing tactics, so the small business owner or professional services practitioner does not have to do a course or get an MBA to discover how to boost their fees without the losing sales.

Some of the pricing strategies are very simple, while others require significant planning. Most of these strategies can be implemented without outside assistance, although professional presentation will improve the effectiveness of the more sophisticated strategies.

In the coming weeks, book extracts will appear on this blog. If you wish to be notified to be put on the pre-release list and to receive a pre-release discount, please register here. (There is no obligation, but you will be notified before everyone else.)

Become a Price Maker.

May Your Business Be - As You Plan It.

Over to You. What do You Think? Post Your Comments Below.
Dr Greg Chapman is the Director of Empower Business Solutions and The Australian Business Coaching Club and is Australia's Leading Advisor on Emerging Businesses and provides Coaching and Consulting advice to Australian Small Business Owners in Marketing & Business Strategies Planning & Systems. He is also the author of The Five Pillars of Guaranteed Business Success and Price: How You Can Increase Your Prices Without Losing Sales.

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1 comment :

Hussey said...

(operational and variable) in such a way that their profit margins wouldn’t get hurt. (If the quality is maintained or not it is a different thing & depends variably from business to business).
What are the trade-offs if the Prices increase by 2%, 5% or by 10%
Wouldn’t the customer loyalty be vanished if there is any?
Yes big businesses like Coles, Woolworths, and Harvey Norman can afford the price increase as they are the price makers but still you would see that your local woollies store always tries to match or lower the prices to get them in line with their smaller competitors (local street corner stores or small franchises like IGA).
From my research and experience I know that a big retailer like Harvey Norman put their prices to keep at least 200% or above profit margin. They do it for several reasons;
1. To pay for their high operational costs
2. To keep their share holder happy, lower margins will hurt their share price & balance sheet eventually
3. They make and keep prices bit higher because they know if the customer is offered a lower price then it will be very hard for them to increase those prices. (it’s just a consumer nature). Thats why they keep the prices high first then put them a bit down to offer a Grand Sale!!!
4. Can the small business afford this all? Yes it is the consumer habit too, that first when they see the higher prices most consumers retreat and back away from that business but eventually come back, some of them, not all.
5. Other things being considered equal how a small business can justify the big increase in prices like you said by 10%, when they have minimal operational and other variable costs.


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Dr. Greg Chapman is also the author of
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