Price It for Profit

Funny how many folks work so hard and don't bother to watch the bottom line. "Yeah, business is good, but I can't make any money at it," is what they sometimes say. I recently spent some time with a potential entrepreneur who had a dynamic concept and a darn good business plan. She's the type of person I hope makes it big with her idea. I'm glad we were able to talk about her proposed manufactured item because we focused on what I believe is a do or die decision for her–pricing. 

It's possible she will be able to make her manufactured piece, sell it in quantity and pay herself a decent wage. But at her proposed price, that's the most she'll accomplish, and she'll need luck to do that. Her pricing thoughts provide virtually no chance for wealth creation. 

That's just one of dozens of examples I could share on inadequate pricing. Entrepreneurs are often scared to death to price their product where appropriate profit margins are possible. 

I've been in the restaurant business since 1973. On occasion, our peers have scorned us for our pricing. Yes it's true. Our prices have historically been slightly higher than other similar restaurants. 

Unlike many, we actually practice effective pricing. We have constantly remained aware of the market, what our competitors are doing. We don't select a price because we're greedy. We're simply aware of what's going on around us and what we must do to meet our Strategic Plan's goals for return on sales and investment, while providing perceived value to the customer. 

For years I've observed businesses in many industries. I've rarely seen a company go out of business because it overpriced. On the flip side, I know several that have created overwhelming problems for themselves, including failure, because they didn't know what their costs were and had no idea what they needed to charge. 

The most profitable organizations know where they are, both in internal needs and external environment. They have pricing awareness. Without it, owners become timid and unsure of them- selves, creating a tendency to underprice. 

Do you want a business that's a leader in its industry? Then become price-aware. Know the value of your product or service in the competitive marketplace. Match it to your needs, and price it for profit.