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Reviewing your prices

Reviewing your prices

Regularly reviewing your prices and checking them against your competitors can be an effective way of increasing your sales, profits, or both.

You should try to estimate the likely effect of different price changes on the sales, cash flow and profitability of your business before making any changes.

To do this successfully, you need to understand:

Below is a video explaining how to forecast your finances.

It’s worth bearing in mind that offering a discount can sometimes reduce your overall profitability, even if your sales go up. Equally, you might be able to make more profit overall by increasing prices, even if you’re selling fewer items.

Small changes to pricing like providing loyalty schemes or bulk discounts can increase sales to both existing and former customers.

Example

A car wash offers free cleaning every tenth visit if customers opt for the deluxe service. Even though they’re giving something away for free, the value of repeat business from loyal customers means that profits go up.

It’s likely that it would have cost significantly more to generate the same amount of sales with new customers, resulting in less profit.

Below is a video regarding dealing with cash flow problems, including handling late payments.

You should also regularly check your prices against competitors. This will help you find out if you’re:

Useful links:

Growth hub providers – help with generating more sales

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