How to Set Prices
I was going to title this post Covering Your Assets, but technically we’re not talking about assets today. We’re talking about expenses—business expenses. The kind you have to pay to run a small business. I’d like to tell you that I have the secret for covering all of your business expenses if you’re a small, service-oriented business. The secret is simple. The secret is almost obvious. But sometimes we find the secret hard to justify.The secret is: Raise your rates.
via Facteon.
Tim Whelan on April 14th, 2006 8:32 pm
Just because your expenses are high don’t mean you have justification toraise the cost of service. Give me a brake. Why don’t you do a little cost analysis first and see why your cost are high. Maybe you are incurring cost that aren’t justified hen we first sin which case you are not justified in passing them on to the customer.
I will agree many times we under charge wtart, add a new service or when we try to under bid (not at all smart) our competition. However, the simplicity of the article is somewhat on the nieve side of defining the problem and offering a solution.
Customers are smart and they know when you are charging to much. This is especially true with online customers who are more aligned with market pricing. Customers have to come first or you will really be left with nothing when they go else where.
sfrewerd on April 16th, 2006 11:16 am
The service business that I provide requires my raising rates not only to cover expenses, but to remain competitive.
chicky401 on November 19th, 2007 8:04 pm
I think it depends on what the expenses are on if you can justify raising the prices. If you involve any kind of traveling then you can justify it by the gas hike as all stores you buy from have. Diesel prices are at an all time high, in NJ the average is 3.30 a gallon and trucks get terrible mileage. Stores pay more shipping and the customers help pay for the increase. If it is something you can decrease your cost of then I think you should consider decreasing your cost. Example-electricity, try to get efficient light bulbs and run everything more efficiently. I think you should evaluate first. Less people will buy a more expensive item where more people will buy a less expensive item.
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