Step 7 to Build a Better Business – Check Your Pricing

In Step 6 of 30 Steps to Build a Better Business, adjusting your product pricing was mentioned as a possible solution for low or negative product margins. Even if you aren’t experiencing low product margins, it’s a good idea to check your pricing regularly (at least once a year), to make sure it’s in line with your particular business strategy and what the market will bear.

Make a List.

Make a list of all your products and prices. If you completed Step 4 to Building a Better Business – Shore Up Your Infrastructure – you should be able to get this list from your Product Management System.

Look Externally.

Think of 2-3 companies that are in the same ‘space’ you’re in. They don’t necessarily have to be your direct competitors. It’s best to choose companies that have a business model and line of products that most closely resemble yours. Get copies of these companies’ catalogs, or visit their websites and review their prices for the same or similar products that you offer. Are their prices higher or lower? Based on the relative quality of their product, additional services and benefits they offer, does this higher/lower price make sense? Is your goal to be the high-cost or low-cost alternative to these companies? If you have a higher price, can you and have you clearly articulated something about your business that justifies it?

Make Adjustments.

Once you’ve performed the research and answered these questions you can determine if you want to adjust your prices, and if so, by how much. If you do decide to make changes in your pricing, of course that means you’ll have to update the systems and processes to reflect the new prices. 

Inform Your Customers.

 You should also consider informing your customers about any price change before it happens. A simple statement on your website, or an email or letter mailed out to existing customers letting them know when your prices will change and some reason why. This is an opportunity for you to help your customers through a transition, to soften the blow, and even invite their feedback, and while some may not like the change, they’ll appreciate the heads-up.

Here’s one way of communicating a price change due to a change in suppliers.

Dear Valued Customer,

We at Happy Campers feel that our primary responsibility to you is to provide a high quality product. That often means that we can’t settle for low cost suppliers that provide products that don’t meet our standards. To better serve you, we partner with suppliers that share our values for consistent, high-quality goods and services. We have recently changed suppliers for our line of EasyCare camping products, and we will be adjusting our prices on this product line accordingly. The price change will take effect on Monday, May 25.

Please feel free to contact our Customer Service staff if you have any questions about this change.

We thank you for your continued business,