When businesses look at their different products and services, they usually have pricing strategy. For products they may, for example, double the wholesale price to cover their overheads and deliver some net profit. For services, they may look at how long the component tasks take, the cost of the employees delivering the tasks, and again add a factor for overhead to determine their prices.
What few do is consider the cost of a sale. Now some sales are transactional, for example when you order a cup of coffee at a café. The barista isn’t spending a substantial part of her time convincing the customer to buy the coffee as the customer has already made a buying decision when he walks in to the café.
If, however, a person works at a car dealership, all their time is spent making the sale, and quite often there is no sale. In other businesses, employees spend time on both selling and delivering. These costs need to be considered when pricing products.
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Dr Greg Chapman is the Director of
Empower Business Solutions and is Australia's Lea
ding
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 Charge More Without Losing
Sales.
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