We’ve recently noticed quite a few extra cost pressures on our retail business – everything from energy, to staff, to suppliers seems to be costing more. I feel we’ve got no choice to pass this on to our customers. How can I do this in a way that won’t drive them away?
Pricing is all about perceived value. Whatever you do, don’t price yourself out of the market. You must ask a fair price for your product.
You should look at your competition and look at their prices, but don’t become obsessed with their price structure.
Price setting will become easier once you’ve been in business for a while but in the early days it will give you sleepless nights.
The prices you charge must cover all the costs of running a business, leaving you enough profit at the end to enable you to reinvest in the business as well as to pay yourself a wage.
It’s a balancing act – the retailer wants to make a reasonable profit while the customer wants value for his or her money.
Don’t fall into the discount trap. If you train your customer to wait for a discount before buying you will never be able to sell anything at full price.
In our business we do a few basic lines at a lower margin. For example our plain steak pie, but we make it up on the margin for our gourmet pies and maybe you could do something similar.
One of the biggest things is the selling skills of your staff. It will be a large factor in the success or failure of your business and they need to understand why you need to make a profit.
They need to know about the rising costs, so if you see articles on that subject in the paper or in a magazine cut them out and put them up on the staff noticeboard. You always need to sell the price increase to your staff first.
To your customer the salesperson is the business so make sure you train them well. Turn them into a motivated sales force.
I can guarantee you will lose more sales from lack of good service than from high prices. Give your staff all the training they need to be great salespeople and give them terrific product knowledge.
If price is a problem get the staff to suggest other items that could do the job. We all love to be served by an experienced, well-trained person who can offer simple solutions to our problems.
If you take an interest in your customers’ needs the price is irrelevant. Give them fantastic service and don’t get too tied up in pricing.
We often use price as an excuse instead of running our business better. Don’t. Quality and service are remembered long after the price is forgotten.
Over the years I have seen mates of mine not put up their prices and today they’re not in business. They went broke.
Always put yourself in the customers’ shoes. Selling is a skill. Make sure you train well.
Don’t underestimate the value of product knowledge and whatever you do don’t take the customer for granted.
At the end of the day people will come to you because of your perceived value, which includes your friendly service, your terrific product knowledge and the quality product(s) you sell.
You’ve got to have belief in yourself, in your product and in your people.
You’ve got to build a level of trust and you’ve got to communicate the benefits, so the price won’t be a main issue. That’s the ideal situation.
You’ve got to tell them about the benefits and advantages. In our business we offer a 200% money back guarantee – we give them their money back and replace the product.
You’ve got to make every customer feel welcome and appreciated. You’ve got to listen to customers because it looks very different from where they’re standing.
