Pricing Strategies

Do you have pricing procedures?
Some of the areas to consider in relation to setting prices 

  • "Gut instinct". When people set their prices based on gut instinct, sometimes it works out OK, but it is far better to try to institutionalise a process of gathering customer feedback and analysing historical sales patterns and requests for the products from customers and prospects, analysing the hard numbers, knowing the gross profit margins on various products, knowing which ones are being sought by your customers, preparing a stock matrix, knowing the "Stars", the "Cash Cows" and the "Problem" lines.
  • "Changing prices at regular intervals" e.g. 1st January, 1st September. This is a very methodical approach to changing prices. The better practise is to change prices based on marketplace changes. What new patterns are occurring? It is best to set your price strategies as being responsive to market conditions.
  • "Scenario Modelling". Don't be too mechanical in your approach to setting prices. Whilst scenario modelling can assist, don't be a slave to a mechanical pricing calculation. You need to have undertaken real market due diligence, rather than just having all of your calculations determined on a "set formula" approach.
  • Price change might be "unfair to customers". It's your business, not the customers. Customers are free to purchase from someone else. You need to worry about your bottom line and concentrate on the extra values that you deliver to your customers through the pricing differentiation policies already mentioned.

It's far better to link your pricing to changes in marketplace conditions and fantastic customer service. This is differentiation that encourages customers to come back, even though you've effected some price changes. Setting a price strategy is scary for many businesses because there is no set methodology on how pricing changes should be made. Why not establish your pricing strategy reliant on the marketplace differentiation you have for your products highlighting your emphasis on customer service, rather than setting pricing on an internal cost recovery basis?

Have you considered that the problem you might be experiencing in your business is being caused by an incorrect pricing strategy rather than a marketing problem? Call us on 02 6686 3000 to review the pricing procedures you have in place in your business and how they impact the performance of your business.

How do you grow into a successful business that can compete?
Australia's small to medium enterprises (SMEs) will be given stronger support to grow, improve productivity and achieve international competitiveness as part of the Gillard Government's A Plan for Australian Jobs package.

Minister for Industry and Innovation, Greg Combet, said the Government wants to encourage more of Australia's entrepreneurial small businesses and start-ups to grow into successful mid-sized enterprises that can compete internationally.

A Plan for Australian Jobs will help Australian SMEs to overcome limiting barriers through:  Read more…

Buying depreciating assets

The best way to buy
If you need to buy depreciating assets in your business - computers, machinery, cars, etc - we're about to give you a whole lot of reasons to go shopping.

We're often asked about the best way to acquire different types of assets. In this case we're talking about plant & equipment, depreciating assets purchased for use in the business. New rules that came in on 1 July 2012 provide significant tax advantages for small business. The new rules mean that, in some cases, a small business can claim the whole amount of the asset purchased as a tax deduction in the year of purchase. Normally, assets purchased in a business are depreciated over a number of years, or their effective life.

To access these simplified depreciation rules the entity needs to be in business (so, is trading rather than just holding investments) and, has an aggregated annual turnover of less than $2 million. Bear in mind that the aggregated turnover test not only looks at your turnover but the turnover of any entities connected to you, such as a trust.

Buying assets under $6,500 Read more…

Work Life Balance

Small business bosses slaves to their smart devices
Small business owners can't clock off even when they are on holiday or should be asleep, research finds.

Most owners of small businesses have mastered technology but, because of it, find it increasingly difficult to stop work encroaching on their personal time, according to a recent survey.

The study found that 89 per cent of those surveyed felt they had mastered the use of technology in their business, yet 38 per cent of respondents admitted to working when they should be 'off duty'.

Work-life imbalance
Further, the survey found a staggering 64 per cent of business owners having made or received work-related communications when it may be inappropriate, such as during recreational time or when commuting.

Being 'switched on' out of hours was not necessarily an issue for all those surveyed; 37 per cent said they found work interfering with their personal lives, compared with 23 per cent who did not.

There were a number of techniques used by SME business owners to hide the fact they were working, Read more…

Event Sponsorship Special Announcement

Ballina Surf on board as 2013 Surf the Wave to Success sponsors
Collins Hume Accountants & Business Advisers are proud to announce a very exciting development with respect to 2013's Surf the Wave to Success conference in Telos Islands.

We have aligned ourselves with arguably the longest established and most iconic surf business in our region as a conference sponsor. It is exciting times for Collins Hume and now Ballina Surf with the momentum of the Surf the Wave to Success international business development conference continuing into its third year. Read more…
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