Bare Bone Biz
Proper Pricing – Can you get there from here?
You want to make more sales and more money. Good for you. And it’s good business.
Here’s the problem. One of your customers may balk at your prices. Nobody wants to spend money on drain and septic problems. As consumers, we would rather buy…anything else! And, if you don’t know how much you need to charge, you can be tempted to lower your price. If you do know, then you can confidently walk away from a sale if it’s going to cost you to make that sale.
Once upon a time I learned a great secret about making money in this business. Here it is…
You’ve got to charge more than it costs.
Do you run accurate financial reports every week? Great. Then you know your costs and you know if you are making money. Or, are you just hoping there is enough in the checking account to cover this week’s bills? Maybe you know you should keep better track of the money, but you keep putting it off because you…
Are too busy?
Never learned basic accounting and finance?
…or all of the above?
I graduated at the top of my class with a degree in business administration and still didn’t know how to balance a checkbook. Then, I jumped into the family plumbing company and nearly sent it down the drain. UGH. I was busy and scared and embarrassed but I finally found a mentor – who taught me financial basics. I learned to crunch the numbers and it has made all the difference to
It’s time to clean up the “slinky-knot” mess you may have made of your accounting program. As the owner, you’ve got to know because it’s your money.
Get the financial reports current and accurate. Then, crunch the numbers. Put a simple budget together. Add up your costs of doing business and then come up with a top line Sales goal that covers your costs and leaves you with a profit. How much profit is up to you. (Isn’t it nice to be the boss?) Use a pencil and a columnar pad, or a simple budgeting program.
If you are just guessing at your costs, you won’t have a clue as to how much you need to charge. You could be swayed by your competitors who haven’t crunched the numbers either. You might be tempted to try and match their price. (Really…how do you know that they are making any money?)
If you are priced properly, you are probably going to be the high priced provider of your goods and services. You’ll be in good company. Notice where most market leaders are positioned when it comes to their pricing. Starbucks, Coppertone, Merry Maids, Band-aids, Charmin…these winning businesses leverage the value of their products and services and skip selling on price.
Put a budget together. Come up with a winning selling strategy and goals for Sales and Expenses. Now, you’ve got a good game to play. Sell enough at the right price and hit your Sales and Profit goals. That’s how you win.
If you are selling at the right price, here’s something you’ll discover: Sometimes your customers will balk. People whine about price because they don’t see the value at that price. Or sometimes they are just frustrated because, well, it’s a drain or sewer problem, and they don’t really love spending money on these things. Offer your understanding, education, professionalism, support, and love. And take their money.