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Don’t Compete with Price Cuts

You can’t sell under the cost of producing goods and services and hope that increased sales will lead to a profit. You should not do it even to generate customers with the thought of raising prices to a profitable level in the future.

Let’s look at a few of the considerations made when setting a selling price for goods or services:

  • the cost of the material to make the products
  • the cost of manpower required to assemble or to manufacture your product
  • the cost of manpower required to package service to be provided
  • the cost to deliver products or services
  • the cost of marketing
  • the cost of fixed overhead such as rent, phones, insurance, retirement packages, office supplies, staff, etc
  • the cost of reserves needed for the unexpected 
  • The profit required to make your business venture worthwhile
  • The cost of the owners time, over and above a salary, to make the venture more than “a job”

These basics plus any other expenses particular to your business make up the final market cost for your product or services.

Now let’s look at what you are selling; is it price or benefit? A good plumber, for example, does not talk about the $75 he charged you for an hour of his time. He talks about the several hundred dollars you will be saving by his stopping the leak.

Your challenge today is to describe the benefit that sets your products and services above all others. Your marketing should be benefit based,  and should be talked about by everyone in your firm. If someone wants the benefit, they will pay the price you ask to deliver it.

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“Consider yourself one of the best at what you do”

Have a great day!

1 Comment

  1. Business office supplies on April 11, 2010 at 2:17 am

    Business office supplies

    It’s good to read a quality article for once

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