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Let’s cut our prices and make it up in volume….


The current economic crisis has caused many businesses to rethink their pricing structure. The thought being that  is prices are cut there would be more buyers and even with a smaller profit margin the increase in customers would make up the difference.

While I don’t have  statistics for every industry, I believe that his example ( from the financial industry) deserves attention regardless of your service or product. This study was conducted over a three year period ending in June 2011.

  • those who cut their fees did not retain more clients than those who did not offer discounts
  • advisers who raised their prices over the past three years had stronger growth in production than those who didn’t.
  • those who cut fees had difficulty raising rates when markets improved
  • decreasing prices and increasing volume means additional work and staff expenses to achieve the same results as before.

I selected this model because the financial services ( stock brokers, financial planners, insurance, etc) were hit hard by the economic downturn. The conclusion is that our time, services and products have a certain value and it is up to us to educate our clients that economic downturns doesn’t mean that prices should go down.

My suggestions for surviving in a down economy are:

  • cut expenses as much as possible
  • don’t cut the price of your services or goods
  • don’t cut staff, first offer reduction in pay to keep everyone employed
  • concentrate on “customer care”
  • make all staff members part of the marketing team and train them how to develop more business in their “spare time”

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Always maintain a positive attitude and a smile on your face.

Have a Great Day!
Nick Petra  (nick@nickpetra.com)
www.solutionsbynick.com
www.paydirtbooks.com

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