It’s no secret that business is booming here in 2014 relative to any of the years since 2007. With the UK’s economy seeming like it’s doing better than the other European territories, now might seem the time to hike your prices and make your customers pay that little bit extra. The only problem is, your customers aren’t necessarily feeling the same economic benefits as your business is, so a price hike in your products and services could potentially push them away.
You generally have two options:
- Rise profit levels to keep your prices low
- Use pricing psychology that works (the 3-level pricing strategy)
Here are the options in more details:
1. Rise profit levels
The trick to rising your profit levels is to keep your prices low to keep your customers happy. Here is how:
Work Smart and Hard
Many companies rise their price levels as a brute force way to cover their production costs. In other words, if the materials your company use are getting more expensive, and it’s costing more to employ the work force you need to carry out the work, it could seem like a sensible idea to rise the price of your products.
Unfortunately, this rarely has a positive affect, and it’s down to you as the business owner to see how you can come up with smarter solutions to these problems. Whether you need to sit down and look at your work-flow processes, or completely redesign how your company operates, taking the time to come up with smarter strategies will help to keep your customers happy by reducing your costs.
Check Your Options Regularly
The next thing you need to ensure that you’re doing is checking your options on a regular basis to make sure that you’re always getting the best deals for your raw materials/imports, and you’re receiving any and all financial help from the government, bank, or other similar financial institution.
One of the worst things you can do as a businessperson is to stagnate in the technologies, services and suppliers that you use, so with that in mind, checking your options every month or so is a sensible way to ensure you’re always getting the best value for money, and this you can – of course – pass directly onto your customer.
Get Your Company Finances Right
Ultimately you should always try to exhaust every single option before you turn towards the price of the end product as a means to increase your profit. A really comprehensive way of ensuring you’ve checked every possible element of your business is to consult your finances and if you’re not an expert, you can always turn to a financial advisor service like Gibson Hewitt.
2. Adopt 3-level pricing strategy
Derek Halpern reveals one trick that has proven to be effective in getting your products and services priced optimally. It’s called the 3-level pricing strategy. Let Derek explains it better:
So as you can see, there are plenty of ways to keep the price of your product down, and if you follow this general advice, you should be able to keep your customers happy.
Photo credit: Allen / Flickr