The Australian Small Business Blog

Monday, September 21, 2020

Smashing the Link between Cost and Price



  by Dr Greg Chapman

Businesses often use simple formulas to calculate their prices. Usually  based on some on some mark-up, so in a store all items might be priced with a 60% mark-up on cost with the 60% covering wages, overhead, and hopefully profit.

In a businesses where prices are easy to compare, this practice is rife, but for more complex services or businesses which package their products in ways that can’t be compared, this restraint need no longer apply.

Monday, September 14, 2020

The Third Profit Driver – Increasing Average Value per Sale



by Dr Greg Chapman


In an earlier article I described The Five Profit Drivers marketing system. The third of the Five Profit Drivers is Increasing the Average Value per Sale.

When they ask: “Do you want fries with that?” McDonalds knows that about a third of their customers say yes. The marginal cost of the fries is small. Their overhead costs, which are quite considerable, the restaurant, staff and equipment have not changed because of this additional sale. The cost of the fries, the potatoes and packaging, is a small fraction of the selling price of the fries, so almost the whole price of the fries goes straight to the bottom line, all achieved by asking a simple question at the time they were making a sale.

Monday, September 07, 2020

Ad of the Month - The Elephant in the Room


by Dr Greg Chapman


What’s the biggest objection people have to purchasing any product or service in your category?

Does it work? Will it really save me time? Will it really save me money? Will it really make me money? Can I trust it? What if it breaks down? Is it really value for money?

What is the biggest objection in your industry? In the following ad, the question is data privacy.

THE AUSTRALIAN SMALL BUSINESS BLOG IN TOP 100 GLOBALLY

Awarded Top 100 Small Business Blog

Award from Feedspot, the international RSS blog syndicator.

Featured Book

Dr. Greg Chapman is also the author of
The 5 Pillars of Guaranteed Business Success

The Five Pillars of Guaranteed Business Success

Facebook

Twitter

LinkedIn

Goggle Plus

Atom Feed