As a small business owner, record keeping is mandatory to keep track of business expenses, profits, taxes and even to price adjustments. When you are first starting out, you may have set your prices to attract customers, and a few months into ownership, you realize you’re losing money. Setting the right prices is a tricky and sometimes difficult thing. If you’re prices are too high, you risk turning off customers. Of course, that situation is easily remedied by dropping prices to more reasonable levels.
When you set prices too low, it’s harder to fix. Nobody wants to buy a product at a terrific price and go back the following week to find that the exact same product is nearly twice as much as before. You risk losing that customer, and anyone they have complained to.
When setting prices, there are a few things to keep in mind.
Price is not everything. While it may be a motivating factor, many customers will pay more for higher quality, uniqueness and especially superior customer service. Prices should be set according to your product, your service, not based on a competitor’s.
Set prices to cover your costs. No matter what product or service you are offering, you can’t start out taking a loss or your business is doomed. Make sure that your pricing, purchasing, staffing, and servicing decisions are based on real numbers and facts, not old data or assumptions.
Of course, there may be a time when your costs rise, and you may need to increase your prices accordingly. If you've established a solid reputation for quality service and product, your regular customers will understand.
To ensure your prices are set appropriately, maintain strict sales and labor records to track your costs and profits with the right forms available at JB Forms.