Why You Should Revamp Your Pricing in 2024
In your entrepreneurship evolution, pricing is one of the most scary and yet crucial aspects of your business.
Whenever we talk to our clients—small business owners, creative founders, and intrepid solopreneurs— about pricing their services they often immediately freeze. It’s a scary topic!
It’s difficult to know how to best price your products or services, to know how much your costs should be, and if you’re going to be able to find customers to pay the price you’re asking for.
We get it.
How to Get Over the Fear of Increasing Your Prices
We find that when you involve a financial expert to look at your pricing together, it’s all a little less scary.
At The Boutique COO, we simply make it a part of your annual business review to check your pricing and confirm it’s high enough to help you hit your company’s financial goals. This way, it becomes an objective business decision and not an emotional one.
If you’re not convinced you should be revising your pricing, here are a few essential reasons and strategies to convince you (and your customers) why you should do it this year.
Reason #1 - Inflation Affects Your Business
In the past few years, where pandemics and exponential tech advancement have reshaped economies and industries, inflation has affected almost every business.
Whether it’s the surge in the cost of goods, services, and operations, if you haven’t changed your pricing you’re likely making less than you used to be.
There is a lot of nuance in this analysis within your business. Your top of line revenue might have grown last year, but your costs likely grew at a higher rate. This leaves you with less money in your bank account.
If you work with The Boutique COO, we’ll do an extensive pricing review to determine which costs have risen more than others so you know which prices need to be revamped.
With careful financial analysis and competitor insights, you can adjust your pricing to not just match inflation but to reclaim lost margins and safeguard against future financial crises.
Reason #2 - Changes in Your Competitive Landscape
Since COVID, so many businesses have unfortunately gone out of business and many new businesses have popped up. It’s also very likely that your customers are presenting new problems for you to solve that may not have been part of the pre-pandemic conversation.
This global business disruption has been a great equalizer and it’s time to accept we live in a different world now.
We’re in a time where under-pricing or over-pricing can spell the difference between sustainability and going out of business.
Your pricing strategy is how you position your business within your market.
It’s extremely important you know how you compare in the eyes of your customer and that you shape your business goals and pricing around how you want to be perceived.
A well-crafted pricing strategy puts you in the driving seat to get the right clients and control your bottom-line.
Reason #3 - Aligning Your Pricing Strategy with Your Business Goals
Owning a small business is such a dynamic experience and there’s a good chance that your goals for your company and for yourself have changed even in the last 6-12 months.
What you started with may no longer be what you aspire to achieve.
Perhaps the emphasis has shifted from immediate growth to long-term sustainability, or from volume sales to curated customer experiences.
Your pricing must align with these evolving objectives.
It’s crucial that your adjust the pricing of your product or services to the phase your business is in and that you continue to evaluate that over time.
How to Conduct a Detailed Analysis to Revamp Your Pricing
Revamping pricing is not a shot in the dark; it is a structured approach that demands disciplined analysis.
The Boutique COO has a proven process where we document your current costs and the rationale behind them. Together we’ll scrutinize your cost structures, identifying areas that have inflated disproportionately to your revenue.
In addition to that, we’ll also conduct consumer research and aim to understand their willingness to pay in a post-pandemic world. We’ll look at your market’s trends and forecast how they might impact future costs and demand.
Finally, we’ll stress-test different pricing models through financial simulations, factoring in best and worst-case scenarios.
READ MORE: 3 Essential Pricing Strategy Tasks to Conduct Every Year
Ready to Revamp Your Pricing?
Pricing is not a one-and-done exercise; it is a continuous process that necessitates iterative changes at least once a year.
Collaborating with a financial expert will help you continue to make objective and analytical decisions, which can be invaluable in hitting your business goals.
If you are ready to take a look at your pricing and want an expert in your corner, schedule your free strategy chat here!
No need to prepare anything! Our team will ask you all the right questions and empower you with the financial prowess that will set your business apart in this new era.
