Getting higher prices isn’t just about putting your prices up

We can get lulled into thinking that getting better at pricing and improving margins is about putting our prices up, however it doesn’t have to be that one dimensional.

Which is good news given how many people and businesses fear putting prices up because it will cause customer objections and lost business.

So if you can be better at pricing and grow your margins without necessarily ‘just putting prices up’, what can you do?

Here are some ideas for you to think about…

• Stop giving discounts – or reduce them or make them conditional or just don’t make them round numbers.
• Stop doing promotions or product / service give aways, 2 for 1 and so on. They rarely drive more business/profit.
• Implement the prices, fees and terms you have already agreed – many don’t.
• Don’t allow product or scope creep where you give more away than you intended to because the customer asks or you feel it will help the relationship.
• Charge for delivery, mileage etc, may be small amounts but they all add up.
• Find out those customers who are under priced and address those issues.
• Introduce a new product and service at a higher price.
• Sort out your value messaging and create marketing content that positions you as more premium so your customers are more willing to pay when you do increase prices or for your premium product.
• Renegotiate cost prices with suppliers.
• If your deals are not delivering the price and margin you agreed then renegotiate them.
• If customers are not fulfilling the conditions in the deal you agreed to, go back to them and consider penalties or price adjustments.

Not an exhaustive list but something to think about.

One of the best ways to understand where you may be able to plug some margin gaps and be more effective with your pricing is by conducting a?price waterfall analysis. I recently did this work with a client and we identified around ￡50,000 p.a. of margin that could be gained/recovered in about 3 hours worth of work (let me know if you’d like help with this). Simple areas where they were losing margin for no valid reason. You may be surprised how many businesses do this.

In the last two days I’ve had emails from service providers who have offered me an ‘introductory discount of 15%’ and another offering an ‘early bird’ discount of ￡500 off their programme – that’s even before they have spoken to me.

It seems as though they have spent a lot of effort (and cost) writing their marketing material and copy, highlighted the features and benefits of what they do and the value I would get from using their programmes – only to bin all of that effort at the end and give me a discount I didn’t ask for – effectively saying “buy my programme because it’s cheaper” – it’s also a bit lazy.

Pricing is THE most powerful profit lever and your margins are precious – don’t just dilute them through weak marketing, feature led selling and weak negotiation.?

Focus on value, sell on value and protect your margins.