As a business owner you are in it to make a profit. That’s why making the right pricing decisions may be tough at times. Charging the right price is even more important when the economy is slow and your sales are slipping. During a slow economy it may be tempting to cut prices to generate higher sales volume. Though sometimes cutting prices only produces lower profit margins.
So, what can you do if you’re budget is squeezed by your vendors when they increase prices? If you increase your own prices, especially in a slow economy, your customers will complain and you could even lose some customers. On the other hand, can you justify holding your prices steady as your competitors reduce their prices? There are no easy answers. Here are a few steps that may help you when making your pricing decisions.
* What are your strengths. How does your product compare to your competitions products? Are your products higher quality, lower quality, or the same as your competitors’ products? How can justify charging higher prices?
* How is your business different? Do you maintain a larger inventory, faster delivery, better payment terms, wider product line, and better service on returned items? If not, how can you change your strategies to gain an edge in any of these areas? Your employees work closely with your customers and may be able to point you in the right direction for your pricing decisions.
* Empathize with your customers. Try to understand your customers’ needs. How can you adjust your