Thoughtful Thursdays – Maintaining prices
A common challenge these days is the one of maintaining prices in what seems to be an ever increasing competitive market place.
While prices for your products and services in your industry may be eroding, a key consideration is the affect of that erosion on profitability.
It is important to know and have a good handle on operational costs if you want to remain competitive in the long run. Knowing your costs will help determine when it does not make sense to take on certain business.
There are also strategic reasons for maintaining business at lower margins such as cash flow and opportunites for growth with products and services that are more profitable. All factors need to be taken into consderation when it comes to price maintainance.
- How important is the custmer to your business? Can you do without the sales?
- Are there new growth opportunities for new products and services available to you?
- Are the customer’s average days to pay within your terms of sale?
- Are there incremental volume opportunities for price concessions?
- Are your business operations running efficiently? Are there areas that can be improved and realize cost savings?
Rather than explaining a price and profitabilty hit as a cost of doing business, consider all options. It may be possible to maintain or even increase profitability as prices come down.
Have a question about sales? Contact Sakanashi and Associates Inc. and I will be happy to respond.
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