How to Compete With Internet Pricing

How to Compete With Internet Pricing

It’s always less expensive on the internet.
That’s the rule of the road in the current era of business.

If you provide something valuable and value, your customers are more than willing to pay $8 for shipping and handling if they are able to cut $4 off the price you are charging.

It’s outrageous! It’s unfair. It’s not rational.

Yet most of the time it’s your job to give them every excuse to do it.

How business is conducted during the Wild West

I had a friend who was an entrepreneur who was exceptionally well at himself.

He was a social person. He was a friend to everyone in town.

Everyone was eager to work with him on his personal service.

He would spend hours helping his customers with the tiniest of issues for no cost, knowing it would be returned as future sales. They were thrilled.

He was a part of his time in the “Wild West” of business.

A handshake was as secure as an agreement. Customers were loyal to the company by default. In his capacity, the owner could choose to alter the cost of his goods in each transaction.

With the knowledge of the value he brought and the value he provided, he was not worried about making as much money as he could.

He would decide what the client could pay and then charge accordingly.

$20 for the mom of three children. $50 for the guy with his gold-plated watch.

What happened to a company that turned into a Ghost Town

This was the way things went for quite some time. It was very effective I would say.

In the latter half of 2008, the economic situation got direr and the mother and her three children stopped coming in.

The man wearing the gold watch walked in decreasing and less.

Every once in a while the doorbell would ring and a fresh appearance would be seen in the lobby of the storefront.

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“Hi I bought this widget on the internet and I was told that you offer the best customer service. Do you have any suggestions on how to fix it?”

Then his business that was once flourishing turned into a hub for free customer support.

Small Business: The Challenge in Small Business

In one instance, I had a discussion with this person regarding the circumstance he was in.

His blame was on economics. He blamed internet prices.

He claimed he could not alter the pricing system he uses because charging clients with high salaries less than that would be “leaving cash on the table” in addition to diminishing the value he provides to clients.

He didn’t want to raise prices because in a month of tight sales and a sale that was lower priced is better than not having a sale in the first place.

He was caught in a loop of single-time purchases. Every purchase was a battle in which the customer had to be convinced of why they should purchase from him.

It took away his enthusiasm and energy.

That’s the issue that small business owners face. Particularly these days.

What is the right amount to charge? How much is too little?

To find the best price to be competitive with the internet as well as the economy and the neighborhood You must address certain issues.

Who sets the price?

The first thing you’ll need to stop doing is to think about yourself as a technician in terms of profit and revenue.

Many owners think this way:

“This transaction takes the following amount of time and dollars to make. If you charge A to make this sale, my profits will total B.”

An Entrepreneur thinks of generating equity in the company. No individual sales.

The Manager creates the systems in place to reach the destination.

It is essential to record an idea of how your company will look in the next three years, so you don’t flit between price issues at a low level without having a bigger picture.

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It is important to determine what type of business you want to start.

Are you planning to become one of the Mcdonald’s or Ritz of sales for widgets? Maybe someplace between?

In the absence of this knowledge then you’re likely to attempt to be everything to everyone.

The consequence of this attitude is the type of mediocrity that characterizes the typical company and causes customers to leave.

You aren’t the only one feeling this type of obligation. We all have the need to be pleasing to everyone.

The trick is to realize that you’re not doing a better job serving your clients or yourself in the process of trying to improve your service.

What’s the future of your product?

Once you’ve determined what type of business you’ll be, you must be clear about the market that it’s expected to serve.

How do people perceive your product? What is the amount they have set aside for similar services? What is their price sensitivity? (Hint: You can start in the process of determining the price sensitivity by listening to others’ comments on your competitors’ prices, products, and services).

What impact do you wish your company to make in the world? Consider asking yourself: are o.k. with “leaving funds on the line” in the event that it is more beneficial to your target market?

If customers receive great value, they will tell their friends. When they are unhappy with the service they will tell twenty.

It’s important to think about the reputation that you’re constantly making, whether you’re doing it intentionally or not.

What is the cost of your services?

In the end, pricing is very important to consider a financial decision. There is a business to run and you have to earn an income.

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How much profits you’d like to generate and the date by which it is due should be included in your Strategic Goal.

Start by looking over the figures. If you have complete financial statements, take them to the bank. (If you don’t, consult an accountant right away).

These are the reference points:

1. Balance Sheets

2. Income Statements

3. Statements of Cash Flow

This is the place to evaluate revenues in comparison. expenses. From a top-down view.

Examine these statements to figure out how much it will cost you to create the product, maintain it and then sell your product for 3 months 6, 6 months, and 1 year.

You’ll also get a history of your sales in actual terms, to help you accurately estimate your sales and evaluate the different sales of your different merchandise and service.

Determine the number of profits you’ll earn by selling X amount of widgets for X amount of dollars for the same period of time.

There could be a chance that you realize you have some items or services that are making you pay more than you will ever be able to recoup. This could be the perfect time to think about cutting fat. Your profit margin overall will improve automatically.

It is important to run various scenarios to see the results of different prices for your service or product.

This is where you’ll be able to modify the numbers.

What’s the lowest you could cost per item and service? What’s your maximum?

It is more important to make money immediately or appeal to a larger market?

You must be able to come up with a cost that serves both your customers and you.

When your client believes that the benefit they’re getting from you is more valuable than the amount they’re trading for it, then there’s no way to compete.