Increase Profit and Revenues in Tough Times
Sales trainer Ron Karr recently posted an excellent article detailing ways for you to increase profit - advice we could all use! Stay tuned today and tomorrow for his expert advice.
"Think about this. If you reduced your fees or prices by 20%, you would need to increase your sales volume by 400% to make the same profit you were making before the price cut. This is what Donald D. Juschartz, County Extension Director at Michigan State University, discovered in his study of how Price vs. Volume relationship may alter the retailer's thinking."
"In declining markets, it is very tempting to lower one's prices to hold on to business, especially if your customers are demanding it. Yet, some are probably lowering prices too fast too soon. And in some cases, it may not even be necessary. Realize that for every price reduction you agree to, you are going to have to sell more to make the same."
"This is the time to hone your skills to avoid price reductions whenever possible," continues Karr. "And in case you need to give in at some point, there are things you can do to limit your losses and in some cases wind up ahead of the game."
--Many customers are going to ask you for a price reduction and even threaten to take your business away. Do not give in. You need to restate your value proposition and ensure the value they are getting from you far outweighs any price concession they are being offered by the competition
--Do not get angry. It is very frustrating to constantly have to restate your value proposition and continue to make it stronger. Get over it! That is the job of a rain maker and sales professional. In tough times, you have to do it more and you have to be better at it.
--If you have tried everything and there is nothing more you can do, make a strategic decision if this business is for you. Will the precedent of discounting affect your overall market position? If not, do what you have to do. If it does, then you may want to take the risk of losing that customer. Anytime one raises a price, 20% of existing customers usually cannot come along for the ride. In a declining market with declining prices, you may want to view the act of staying firm with your current price structure as a form of a price increase.
--If you decide to reduce your price, never do so without getting anything in return. Here are some examples of what you can request in exchange for a reduction in price:
- Longer term of agreement
- Increased volume for existing product
- Placement of additional products
- Reduction in service
- Improved terms
- Referrals
Keep going and do what you can to keep from reducing your prices. It's a slippery slope from there. We'll be back tomorrow with more ideas from Karr on increasing your profits, no matter what the economic situation.
Ron Karr is a professional speaker, consultant, trainer and author who specializes in helping organizations build and maintain high performing sales cultures. Visit him at www.RonKarr.com and sign up for his free Titan Sales E-Report.
"Think about this. If you reduced your fees or prices by 20%, you would need to increase your sales volume by 400% to make the same profit you were making before the price cut. This is what Donald D. Juschartz, County Extension Director at Michigan State University, discovered in his study of how Price vs. Volume relationship may alter the retailer's thinking."
"In declining markets, it is very tempting to lower one's prices to hold on to business, especially if your customers are demanding it. Yet, some are probably lowering prices too fast too soon. And in some cases, it may not even be necessary. Realize that for every price reduction you agree to, you are going to have to sell more to make the same."
"This is the time to hone your skills to avoid price reductions whenever possible," continues Karr. "And in case you need to give in at some point, there are things you can do to limit your losses and in some cases wind up ahead of the game."
--Many customers are going to ask you for a price reduction and even threaten to take your business away. Do not give in. You need to restate your value proposition and ensure the value they are getting from you far outweighs any price concession they are being offered by the competition
--Do not get angry. It is very frustrating to constantly have to restate your value proposition and continue to make it stronger. Get over it! That is the job of a rain maker and sales professional. In tough times, you have to do it more and you have to be better at it.
--If you have tried everything and there is nothing more you can do, make a strategic decision if this business is for you. Will the precedent of discounting affect your overall market position? If not, do what you have to do. If it does, then you may want to take the risk of losing that customer. Anytime one raises a price, 20% of existing customers usually cannot come along for the ride. In a declining market with declining prices, you may want to view the act of staying firm with your current price structure as a form of a price increase.
--If you decide to reduce your price, never do so without getting anything in return. Here are some examples of what you can request in exchange for a reduction in price:
- Longer term of agreement
- Increased volume for existing product
- Placement of additional products
- Reduction in service
- Improved terms
- Referrals
Keep going and do what you can to keep from reducing your prices. It's a slippery slope from there. We'll be back tomorrow with more ideas from Karr on increasing your profits, no matter what the economic situation.
Ron Karr is a professional speaker, consultant, trainer and author who specializes in helping organizations build and maintain high performing sales cultures. Visit him at www.RonKarr.com and sign up for his free Titan Sales E-Report.
Labels: price cut, profit, Ron Karr
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