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We’ve been talking about tolerating a business that scrapes by. I started this conversation last week in this video, So check it out if you haven’t seen this video first.
Today we’re going to talk about one of the three levers you have to pull to improve the profitability of your business. Just as a reminder, those three levers are pricing, cost of goods, and overhead. And today, we’re going to talk about pricing. How can you look at and possibly change your pricing to improve your performance?
First of all, don’t be afraid to raise your prices. I know a lot of business owners that are, that say I’ll lose my customers. Maybe you will, and maybe you won’t, and you don’t always have to raise the prices for everyone. It could be just for new customers. But let me tell you, and please hear this. There are customers for your services at every price point. Maybe you’ll lose some, but you’ll gain some new customers.
Second, is there a way that you can differentiate your products or services so that you really are providing substantially more value and can justify that higher price point?
Third, do you have more profitable customers or offerings and less profitable customers or offerings or even customer segments? I have had many clients over my time in businesses that do work both for governments, local, state, and federal, as well as private work, and almost all of them find the private work to be much more profitable, and you may need to mix in a little little bit of both. But where possible, if you can focus on the more profitable customers, segments, products, or services, your business overall will be more profitable.
Fourth, can you bundle your products or services so for the same effort in the sales cycle, you will be able to sell a higher-priced package by bundling things?
Fifth or maybe sixth. I might have lost count here, I apologize. Have you conducted market research? What’s going on in your market that will enable you to be a leader.
And seventh, have you calculated your overhead recently? I know many businesses that price their services, which is especially true of service companies based on their overhead. If it’s not calculated correctly, you’re pricing your services incorrectly. So that’s pricing. That’s many ways to look at your pricing.
Next week, we will discuss how to improve your cost of goods sold or services. If you want to get a head start on this or if you want to really build a strong, Fiscally Fit business, please check out my boot camp. The link is right here. This is Judi Otton with GrowthCast, and I’ll be back next week with a new Fiscal Fitness Tip of the Week