Covid-19 has undoubtedly changed the way we do business.
It has also impacted on purchasing habits and, in some instances, reshaped the demand landscape with consumer wallets stretched and their priorities shifted.
For a small business, this is probably a good time to reflect on pricing strategies and to get an idea of how well-positioned they are for the new normal. Deciding the right price can be a tricky balancing act.
Overpricing can put the business at risk of losing customers while setting your price point too low may be seen as signalling inferior quality and could even make some clients hesitant to work with you.
Here are some handy tips to ensure that you restructure your pricing accurately:
Competition: A good start is to have a look at what other businesses in similar fields charge for their products and services. Prices can neither be too high nor too low in comparison, as this can indicate either an overpriced offering or not as much experience in the industry.
Options: Though your business may be small, it may cater to others who cannot afford the rates that larger organisations’ budgets can. Different pricing structures, such as hourly or package rates and extended payment terms are then key. Cash-on-delivery may also appeal to different types of clients.
Collaboration: In today’s chaotic business environment, many customers are seeking a one-stop-shop instead of having to deal with a number of different firms and suppliers. As such, if your business can collaborate with other industry players, its ability to offer one comprehensive package may increase your chances of securing the sale or contract.
Expenses: Take into account the practical expenses such as office rental, electricity, fuel, and vehicle wear and tear. These running costs will impact your bottom line and should therefore play a key role in your pricing structures.
While many struggle with the task of pricing accurately for a changing market, this should not be a deterrent that keeps potentially booming businesses from flourishing, and from contributing to the growth of the South African economy.
Do not delay in getting your hands dirty and making these tough decisions.
Ben Bierman is the managing director at Business Partners Limited
BUSINESS REPORT