The COVID-19 pandemic has undoubtedly changed our world and the way we do business. But it’s also impacted consumer purchasing habits and, in some instances, reshaped the demand landscape – times are tough; consumers’ wallets are stretched; and their priorities have most definitely shifted as a result.
For a small to medium-sized enterprise (SME), this is probably a good time to reflect on your existing pricing strategies and get an idea of how well-positioned you are for the new normal consumer landscape.
Deciding the right price for your products and services, however, can be a tricky balancing act. Overpricing can put you at risk of losing customers – especially in these tough economic times – while setting your price point too low may be seen as signalling inferior quality and could even make some clients hesitant to work with you.
To help in mastering this balancing act, here are some handy tips to ensure that you re-structure your pricing accurately:
1. Scope out the competition
A good starting part in any pricing exercise, is to have a look at what other businesses in similar fields charge for their products and services. Prices can neither be too high, nor too low in comparison, as this can indicate either an over-priced offering or not as much experience in the industry.
2. Offer flexible payment options
Just as your business may be small, it may cater to other small businesses who cannot afford the rates that larger organisations’ budgets can. Different pricing structures, such as hourly or package rates, and extended payment terms, such as 30 or 60 days or cash-on-delivery, may appeal to different types of clients.
3. Collaboration is key
In today’s chaotic business environment, many customers are seeking a one-stop-shop instead of having to deal with a number of different firms and suppliers. As such, if your business can collaborate and build strong partnerships with other industry players, the ability to offer one comprehensive package may increase your chances of securing the sale or contract.
4. Be practical
One of the most important considerations to take into account is the practical expenses of your business, such as office rental, electricity, fuel, and vehicle wear and tear. After all, these running costs will impact your business’ bottom line and should therefore play a key role in your pricing structures.
While many business owners struggle with the task of pricing accurately for a changing market, this shouldn’t be a deterrent that keeps potentially booming businesses from flourishing, and from contributing to the growth of the South African economy. So, don’t delay in getting your hands dirty and making these tough decisions.