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”
Always maintain a positive attitude and a smile on your face.
Have a Great Day!
Nick Petra (email@example.com)