"The salesman knows nothing of what he is selling save that he is charging a great deal too much for it."
--- Oscar Wilde
Pricing has always been one of those elusive, slippery tasks that tends to frustrate business leaders. Obviously, knowing your costs of materials and labor involved is a critical factor, but how much of a margin do we add for profit? How can we justify pricing in our business while still being competitive in our market?
These are questions that have plagued businesses since the first wheel was sold. Finding a true balance is really more of an art than strictly a numbers game. We of course need to know all costs involved in the project and we need to make a profit. If not, we should close the doors and have a fire sale. But the finesse or intuitive art form comes in to play when we study our market and determine what it takes to compete.
"If you're not worried that you're pricing it too cheap, you're not pricing it cheap enough."
--- Roy H. Williams
Studies have shown that new customers will buy based on price if the product or service is generic in nature. For example, a need for banners for a school function may drive the customer to the lowest price in town. A specialized vehicle wrap may warrant the customer entertaining prices from two of the shops with the best reputation. The customer in this scenario may not necessarily seek the lowest price, but opt for the greatest standard.
"Pricing is actually a pretty simple and straight forward thing. Customers will not pay literally a penny more than the true value of the product."
--- Ron Johnson
A common factor used in trying to price a product or service is usually based on what the market will pay. That has always been a good rule of thumb, but another factor should be considered. Consider a cup of coffee. It used to be that you could go to the local diner and grab a cup of Joe for under $.50. Then Starbucks came to town and people began paying about $3.00 a cup. Coffee lovers gladly forked over their money for a jolt of pleasure.
Your community may be willing to do the same. They might pay top dollar for the extra great customer service you provide along with fulfilling their signage needs on-time.
"Cutting prices or putting things on sale is not sustainable business strategy."
--- Howard Schultz
Dropping prices to attract more customers may work to bring in more people who then see what your shop can do and decide to stay with you long term. Or, they may just take advantage of the cheaper rates and then move on. Perhaps a better idea is to price your products and services at the level of quality you provide and let the word spread that although your shop is more expensive, it is worth every penny.
Either way, pricing is a delicate art form. The use of estimating tools and MIS systems can be very helpful in deciding costs per part, calculating hours and labor rates, determining local and federal taxes, and inputting your specific margins. Even after all the calculations, in today's market it is tempting to reduce the final price in order to compete, and sometimes you may have to. But try not to make it a habit. Price according to the value you bring to your customers and community.
"Anyone can sell product by dropping their prices, but it does not breed loyalty."
--- Simon Sinek
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By Jennifer LeClaire
Tired of sending your banners out so some one else can profit from the seaming? Now you don’t have to. Learn the how now.
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MIS: Is Your System Working For You or Against You?
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Implementing print management systems is not a democratic activity. What you need to become is a dictator to ensure proper implementation.
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