The Price is Right!

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Or is it?! How do you know if you have your pricing right?

Are you working flat out for clients or selling products but at the end of the day don’t feel like you have anything to show for it?

If that is the case then the chances are the price ISN’T right.

Selling time

If your business is essentially selling your time and services then chances are you haven’t factored in the non-chargeable hours that you do – these are the hours spent on admin, on marketing, on business planning.  These are all essential parts of your business but no-one is paying you for these.

Look at what you charge for the work that you do – is the rate commercial and comparable to others offering similar services? Are you valuing yourself and your offering correctly? Chances are that you aren’t.

Selling products

If your business is selling products have you factored in all the costs to bring your products to market – materials, delivery in (and out if you don’t charge for it), time to make etc.  On top of these you need to ensure that the mark up you then add is going to give you sufficient profits to pay for your fixed costs (admin, marketing, business planning etc) and leave you a profit at the end of it all too. This involves being able to estimate the levels of products that you will sell with reasonable accuracy.

Look at what your retail prices are – are they comparable to similar products, are you comparing yourself to the right level of brand (if you are premium, comparing to a low end priced product isn’t helpful for anyone).

If the pricing still isn’t giving the results that you need, look at your materials costs – are you getting the best prices that you possibly can and look at every single element.

Wholesale

This pretty much follows the same principals as selling products – you need to remember that in most cases, the wholesale price will be 2.4 times what you sell them to it for (ie you sell it to them for £10, they sell for £24) so you need to ensure that your costs are correct to give the margins that you need.

Look at what the end retail prices are – are they comparable to similar products, are you comparing yourself to the right level of brand (if you are premium, comparing to a low end priced product isn’t helpful for anyone).

If the pricing still isn’t giving the results that you need, look at your materials costs – are you getting the best prices that you possibly can and look at every single element.

How we can help

The resources section has a business planning pack that is aimed at businesses that are looking to take things that step further, who want to get their costing right and get a business plan in place that will help support their ambitions and aims.

"I have never done a business plan and so was massively caught out when I had to complete one recently in order to apply for a trade show grant for my Brand 'Sas and Yosh'

All I can say is thank the stars for 'Simplified Accounting' and the enormously helpful and descriptive 'Business Plan' template I was able to download quickly and easily from the website.

The template explained each step of the process of creating the business plan, complete with a variety of stages you could use to help you work out what you needed to include in the plan. 

These stages helped you to break down the different elements of your business, inc its incomings and outgoings and where you saw the business going over the next few years.

Once this was completed the brilliant template guided you in putting all this gathered info into easily readable forms that helped to coherently show your intended direction of your business in the future.

The financial forms were easy to fill in and fully editable if required.

It made a hard job easy and helped me to get the business plan finished quickly.

We were even more delighted when our application was accepted on the strength of the plan."

Sarah, Sas & Yosh

 

Rachael Savage