|
|
Like this article? PLEASE +1 it! |  |
|
How to Raise Prices
| Guest post by: Jess Wells |
Article Overview: Bob Goedjen, guest blogger at Cisco Innovators Forum says that if 90% of entrepreneurs have under-priced themselves, plus many businesses have cut prices during the recession, how do you raise prices now that the economy is picking up again? I asked Bob Goedjen of Silicon Valley SCORE to give us his insights.
 |
Free Download - What is a Coverdell Education Savings Account? By Jess Wells |
How to Raise Prices
According to Cisco Innovators Forum guest blogger Bob Goedjen of Silicon Valley SCORE, price is about increasing the margin from sales to offsets costs beyond direct costs. The recession has probably reduced the volume of sales you have. Less sales means less margin to cover your fixed costs. An increase in pricing can sometimes do what a sales campaign to increase volume cannot do.
Similar to the advice on lowering prices or extending discounts you should not to change prices without connecting this to a reason that your customers will accept. When lowering prices you need an explanation so that they don't think you have reduced the quality or features or other things they count on. This is also true of increasing prices in that you need an explanation and the simpler that explanation is the better. A prime reason you might consider giving to your customers is that the new product or service has more performance or features that you believe your customers need or want. Generally speaking there is a long list of items that can be added that do not significantly change the cost to you. In some cases you may even rename the product or service and let the former one die at some point. To perhaps illustrate this, here'san example: you might have gone into your favorite restaurant and noticed the prices seems to be higher for the entrees. If the names have changed you do not notice the change as dramatically since you can't really compare apples to apples.
Another thing to keep in mind is that you don't want to increase prices frequently so make your increase significant. Remember you still can offer discounts and temporary price reductions if needed. If you have a commodity product and your competitors are holding steady you will need to be more competitive but again even commodity products can be differentiated by things like purchase terms, deliver and availability, quality, free shipping charges, and more subtle items like made in the USA, made locally or endorsements for the product.
Perhaps the least preferred reason for explaining a price increase is because your costs have increased. Yes, it can be used but the costs are not often visible to the customer and he does care much normally about your costs. Remember this is all about value when pricing and not cost. The case when a price increase based on cost is more likely to work is when the customer also is aware of the cost increase of something like the price of gasoline when he recognizes you need to use trucks or cars for your business. Your customer is much more likely to be understanding if they too are impacted by the cost of a commodity.
Let's say you decide to increase prices and your current volume of sales stays steady or nearly steady. The result is you have come away with a clear victory for your bottom line. Make sure that your sales force and customer service or any employees interfacing with customers understands your move and has the appropriate explanation to give to customers.
Unscrupulous Competitors
Raising Service Prices in a Recession
Raising Your Prices Without Losing Clients
How to raise your prices due to the increased cost of gas
Pricing strategies
Don't Cut Prices to Get More Customers
Stress-Free Selling® - The Power of Belief
Stress-Free Selling® - Easy Ways to Avoid Price Objections
Your Service Pricing: Get Ready For the Recovery
How to set your prices
Discounting Prices: How Low is Too Low?
The Right Real Estate Offer
Lesson #4: Price Points Make You Money
The Most Important Rule of Business
"Drive ONE"
Gas bills go up by 18% can we take any more
Are your prices working for you?
Higher Gas Prices = Lower Worker Productivity
How to Set (and Get) the Right Prices
5 Tips to Turn Prospects Into Clients
Article Tags: Cisco, entrepreneurs, pricing, recession, sales, score
|
About the Author: Jess Wells RSS for Jess's articles - Visit Jess's website Click here to visit Jess's website   Delegating in a Distributed World New Demands on the CEO Seven Reasons Why Everyone Needs a Website Create marketing messages for customers not lawyers Deciding Bewteen a Roth IRA Versus a Traditional IRA What is a Coverdell Education Savings Account |
Related Forum Posts
How to valuate a business
- Hi Garth - here is how we did it at Northern Crown Capital when I was helping them raise venture capital for Toronto-based entrepreneurs. Assume the start date is 2003 so 2008 projections are 5 years out:
How Northern Crown Capital Valuates a Business
2008 Financial Projections
Earnings Before Tax
$5,865,000
Tax Rate
42%
Taxes
$2,463,300
Net Earnings
$3,401,700
Amount Seeking to Raise Today
$3,500,000
Discounted Value of Future Opportunity, 5 Years Out
2008 P/E Ratio
15
Value of Company in 2008
$51,025,500
Discount Rate Applied
30%
Year 2008
$51,025,500
Year 2007
$35,717,850
Year 2006
$25,002,495
Year 2005
$17,501,747
Year 2004
$12,251,223
Value of Company at Investment in 2003
$12,251,223
Less: Investment Amount
$3,500,000
Present Value
$8,751,223
Discount for Risk & Private Company
40%
Less: Discount for Risk & Private Company
$3,500,489
Private Company Value
$5,250,734
Present Value (What the Owner Keeps)
$5,250,734
60.00%
Financing (What the Investor Gets)
$3,500,000
40.00%
Total
$8,750,734
100.00%
I hope this helps!
Book: Comeback Moms
- Comeback Moms: How to Leave Work, Raise Children, and Restart your Career even If you Haven't Had a Job in Years
Monica Samuels and J. C. Conklin
2006
Jacket:
Millions of educated, professional women are quitting their jobs to stay home and raise their children. That would never be you, right? You worked hard for your degree and even harder to get to this point in your career. Quitting now, even for a few years, would kill your career, right?
That's what Monica Samuels thought when she found out she was pregnant...
Over 60 percent of professional women who leave work to raise children want to get back into the workforce someday. If you even think you might want to go back to work, be it in one year or twenty, you need to lay the groundwork now for a successful reentry or your options will be limited.
1. Quitting: When is the best time to cut the cord
2. Feathering the nest: How to financially prepare before you quit
3. Departure strategies: leaving the office
4. Money and Power: Constructing a new life on the home front
5. Backlash: handling family, friends and angry strangers
6. One foot in, one foot out: How can they miss you if you don't really go away?
7. Part time: It ain't perfect, but it's doable
8. Going back: the when and how of returning to work full time
9. Career counseling: When you need a change
10. Entrepreneurs: True Stories
Resources
Index
Books for Women Entrepreneurs
- There's a thread for good books in the Resources folder, but it doesn't target books for businesswomen particularly, so I figured I'd start such a thread here.
It doesn't matter how successful you are in your business - it's always possible to learn something new.
In subsequent posts I give Table of Contents and brief descriptions for various titles - most of them devoted to the businesswoman - and sometimes a review. If anyone else has read a review, or has read the book and found it useful, please comment!
1. The Old Girl's Network
2. Mother's Work
3. The 7 Greatest Truths About Successful Women
4. Pitch Like A Girl
5. Workplace Warrior
6. Treasure Hunt: Inside the Mind of the Modern Consumer
7. Contingency Planning & Disaster Recovery
8. She Wins, You Win
9. Napoleon On Project Management
10. Why Good Girls Dont' Get Ahead, But Gutsy Girls Do
11. Comeback Moms: How to Leave Work, Raise Children, and Restart your Career even If you Haven't Had a Job in Years
12. The One Minute Millionaire
13. Talking From 9 to 5
14. Soloing: Realizing Your Life's Ambitions
15. 101 Best Home Based Businesses for Women: Everything You Need to Know About Getting Started on the Road To Success
16. Work With Passion: How to Do What You Love for a Living. Revised and Expanded
17. Fail-Proof Your Business: Beat the Odds and be Successful
18. Confidence: How Winning Streaks and Losing Streaks Begin and End
19. Women Don't Ask: Negotiation and the Gender Divide
20. Millionaire Women Next Door: The Many Journeys of Successful American Businesswomen
21. Start Small, Finish Big: Fifteen Key Lessons to Start - and Run - Your Own Successful Business
22. Rewired, Rehired or Retired: A Global Guide for the Experienced Worker
23. The Martha Rules: 10 essentials for achieving success as you start, build or manage a business
24. The Essentials of Entrepreneurship: What it takes to create Successful Enterprises
25. Net Ready: Strategies for Success in the E-conomy
26. The Promotable Woman
27. Leave The Office Earlier: The Productivity Pro shows you how to do more in less time and feel great about it
28. The Work At Home Balancing Act: The professional resource guide for managing yourself, your work, and your family at home
29. Secrets of Six-Figure Women
Share this article with your friends. Fund someone's dream.
Leave a comment below or share on the left and you'll help support entrepreneurs in Africa through our partnership with Kiva. Over $50,000 raised and counting - Please keep sharing! Learn more.
Featured Article
by: 
How To Use Carbon Copy Pro As A Strategic Tool For Your Business
Best Automated Forex Trading Strategy
Build Your List with Joint Venture Giveaway Events
May 2012 Top 100 Social Media Experts to Follow on Twitter
What to measure to be phenomenally successful in business
Newsletter
Get advice & tips from famous business
owners, new articles by entrepreneur
experts, my latest website updates, &
special sneak peaks at what's to come!
Get advice & tips from famous business
owners, new articles by entrepreneur
experts, my latest website updates, &
special sneak peaks at what's to come!
Popular Articles
How To Calculate A Minimum Fee For Your Services
Inspiration for troubled times
How To Become A Member of the Paparazzi
How To Calculate A Minimum Fee For Your Services
Inspiration for troubled times
How To Become A Member of the Paparazzi
Suggestions
Email us your ideas on how to make our
website more valuable! Thank you Sharon
from Toronto Salsa Lessons / Classes for
your suggestions to make the newsletter
look like the website and profile younger
entrepreneurs like Jennifer Lopez.
Email us your ideas on how to make our
website more valuable! Thank you Sharon
from Toronto Salsa Lessons / Classes for
your suggestions to make the newsletter
look like the website and profile younger
entrepreneurs like Jennifer Lopez.