The dreaded price change could cripple a small business. If sales are humming along and customers are pouring in, it may be tempting for a small business owner to raise the cost for each product and provide a needed boost to the financial plan.
However, this step could get complicated, and if it isn't performed correctly, the damage could outweigh the positives. Any company should make sure that a price increase or decrease is approached in the proper manner, in order to best keep customers happy and spending money.
Plan ahead before making any changes
One of the worst things a small business owner could do is make serious pricing changes on short notice. Not only could this present a number of adverse effects on the company itself, it may also come as a shock to the many loyal customers that have been established over time.
Despite this, financial tips to boost prices do exist, and the best way to do it is with a solid plan. A strategy can help calculate any rates, fees or other costs related to products, according to the Small Business Administration. Managers who take a look at these important figures may have a better understanding about the direction the venture is headed in, and whether or not a price change is needed.
Additionally, it may be simpler to package a product with another one, in order to keep customers happy. Any other services bundled together could help a small business increase revenue while not angering anyone with a price hike.
Pick the perfect time to announce changes
A small business should always have a finger on the pulse of its customers. Unfortunately, some managers don't understand the current atmosphere both inside and outside the company, and that could lead to an unfortunate decision. In order to get the most out of a financial plan, owners should pick the right time to announce a price change.
For example, any decision should be made when it could have the most impact, according to Entrepreneur magazine. Lowering prices might benefit from greater buyer activity – and raising prices probably shouldn't happen when many people will object. The holiday season is a good time for an increase, or when new technology gets announced.
However, prices depend on the consumer, the news source noted. As long as people see value in a small business' product, that will make any decisions easier. Perception can have as much of an impact on the process as other expenses.