Lower Your Prices
You might think we’re crazy. You’re trying to make money and we’re telling you to drop your rates. The truth is that by decreasing your product’s value slightly, you can encourage buyers and increase your profit margin while gaining leverage over competitors. It’s profits by volume.
Raising prices may also work, believe it or not. Even if you’re a small business, if you know your target audience and current client base wouldn’t mind an increase in price, you could continue business as usual while raising the sales margin.
The best way to make any profitability decision is to study your customers. You know what they value most about your brand; if it’s the product, they may not mind paying more. If it’s price, then getting an even more significant discount may drive more customers and expand your profits margin.
Either way, make the call only if you know how your customers behave to price changes.
Who doesn’t love cash back? Rebate programs, popular with large products like new cars, issue buyer’s a percentage of cash back after their purchase. This is usually less than 50 percent according to John Courville, a professor of marketing at Harvard Business School.
A rebate offer can generate new sales, while the small percentage of decrease in profit due to rebates doesn’t harm income. Combine a price increase with a rebate can actually cause you to generate more sales without actually losing any money; you’d keep the full sale and grow your profitability while issuing back the surplus of the increased price tag.
Give Customers Something for Free
People will spend money if they think they’re getting more for less.
Reduce shipping costs or eliminate them if someone spends a certain amount. Need to unload stock? Offer store credit or a small gift to customers to make a specific purchase.
Companies like Google, Facebook and Hubspot offer free services that increase customer loyalty, convert leads and increase sales with little effort on their behalf.
It doesn’t have to be something big. Say you sell salt that melts snow/ice. Giving a small packet of such ice-melting salt will allow the customers to test the product. And when it works, they come back to buy that whole bucket of it.
How to Increase Profits of My Business? Stick to the Facts
Data is any business’s most valuable asset. When you weigh your prices against customers’ needs and desires, you get a clear picture on what matters most.
When you understand why your clients spend money on your products or services, you can grow profitability fast without losing any loyalty.
Don’t be afraid to adjust prices; customers are used to it. You just have to know when and how to do it for the biggest impact.
In fact, if you play your cards right and always keep your clients in mind, you will strengthen brand image while making bank.