Most people do not realize the dramatic effect that price has on profit.  A typical British business (based on results consolidated across the business sector by KPMG) has a 25% gross profit (before overheads) and a 5% net profit (after deducting overheads).  One of the first things we distinguished is that for a typical British business a price decrease of 10% will produce cause a such a company to go from a 5% net profit to a 5% net loss.  Conversely a 10% increase in price sees profit rise by 200%.

The common concern for increasing price is that you lose customers, but our model business showed that for a 10% increase in price you could afford to lose up to 28% of your customers and still maintain the same profit.  We saw that even if you lost 20% of your customers in this model, you increase your profit by 60% with the 10% increase in price.

Given that most people are prepared to pay a little bit more if you give them a good reason, the name of the game becomes establishing that value that you can provide above others, carefully choosing how you position your product or service and taking control of the price.

We looked at a variety of tactics in finding ways to increase prices, including relaunching your product or service with new guarantees or service standards; charging different customers different prices with integrity through having quality and economy versions of your product; bundling products; trade ins; charging different prices depending on the timing of sale or delivery of the product; concessions; top down pricing and decoy pricing.  We looked at the cost of discounting your price.

Finally we spent time in workshop session coming up with actions to take on in our businesses.

As ever feedback was highly positive: 8/10 for overall value.

Comments included:

“I find these seminars are becoming an important part of my working month, helping me to take the time to focus on my business.”
“Not to be missed if you are starting in business.”
“Ideal for any business owner looking to grow and develop their business”
“An informative and interesting seminar.  I got some good ideas for my business.  Well worth attending.”