One of the most common complaints I hear from business owners is that they are working harder and making less. When I question them, they often tell me that they've increased their sales but are still making less money.
Without even looking at their books or asking them any more questions, I know what the problem is—their gross profit margins are dropping.
Sadly, few business owners figure out what is happening because they are focusing on sales, not profits! The key is to improve profits before increasing sales. Once you have improved your margins, any increase in sales will increase profits.
I use the following list of 8 secrets with my coaching clients so that they can experience some quick success in increasing their profits without spending a fortune on marketing and advertising. Once you have some success you will be much more motivated to continue the hard work of continuously improving your business.
The first one I’m going to talk about is Increasing Prices. Scary – but often necessary!
The decision to raise prices is a very tough one for most business owners. Most business owners shy away from any price increases until they are forced to increase them.
But my experience coaching many companies in various industries is that most businesses are charging less than they could and should. This directly affects their customers, employees, and profits.
Once you decide to increase your prices, how you increase prices can have a tremendous effect on both your cash and your bottom-line profits. Two companies in the same industry raising prices at the same time can experience tremendously different results.
Adjusting your prices requires you to consider the timing and how your customers perceive the value of your products or services. Here are some things to consider.
- Decide if you should raise your prices.
- Clarify your reasons for the price increase.
- Determine the amount of the increase.
- Consider the ramifications, both pro and con, of raising your prices.
- Planning the price increase.
- Announcing the price increase.
So if you are serious about boosting your profits, you will most likely have the need to, GULP, yes, increase your prices. Be confident in your services, products and abilities and go for it!