Please forgive me. But I am needing help. I am running a business for 15 years. And another for going on 3. You would think that I would be good at this by now. How do I have a profit if I’m barely surviving. I don’t have any money left over to pay taxes let alone call it a profit. It’s like I’m struggling. And can’t figure this crap out. -Mr. Overwhelmed
Profit = Price x Volume - Costs.
The easiest lever to pull for more profit is: PRICE.
Increase your prices.
Read: Confessions of the Pricing Man by Hermann Simon.
All the best!
Raising prices can also lead to a drop in volume.
Dropping prices can lead to higher volumes while he might have unnecessary overhead to cut.
Most businesses are either cost leader, differentiator or focused. Unless OP is in a niche market with little competition or make a truly unique product/service, raising prices might lead to more loss
False. Read the book.
Raising price fixes things on paper immediately but it causes more troubles. It’s fine once in a while and in minor increments, but if it becomes more the customer will take notice and possibly go elsewhere. It’s better to work out expenses and COGS and streamlining efficiencies before increasing prices.
False. Read the book.
I don’t need to read the book; we own and operate numerous product and service based businesses. Internet guru’s say it all the time: just raise your prices. That works if you don’t have repeat customers and someone is coming to you blind, but you can only raise prices on customers so much and so far before they stop buying your product or find a cheaper alternative, ESPECIALLY in times of economic turmoil such as the market were in right now.
I’m not saying you can’t, but the first look should be at the other levers in the business.
False. Hermann Simon is the greatest SMB specialist in the world. Owns a billion-dollar consulting firm in Germany. Read the book.
Not false. Do the work. Again, not saying you can’t raise prices, but these types go to the raise every time as the easiest way to increase profits or improve cashflow in their business, and it’s at their customer’s expense. That’s not the way to run or build a company. Unless you are a corporate shell and have no soul.