3 Common Small Business Pricing Mistakes

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3 Common Small Business Pricing Mistakes
Small Business Awards and Contests You Should Check Out
Small Town Rules for Big Success in Business

Posted: 06 May 2012 01:30 PM PDT

You're rocking the sales funnel, bringing in new business and delivering to your clients like a super star. So why aren't your profits growing too?

oops

You may be an unwitting victim of common pricing mistakes. These drive-by villains can kill your bottom line. Read on to learn if your profit margin is a target.

Small Business Pricing Mistake #1 – Everybody's Doing It

You're almost ready to launch a new product, but still haven't set the price. To save time, and let's be frank (or Betty or Joe… ) , to avoid the number crunching, you set your price based on your competitors' prices. Although the lowest is $99, and the highest is $875, most are in a tight range between $425 and $475. Hmm… how about $462? $462.15? Perfect!

Does this scenario sound familiar to you?

There are two basic problems with this approach. The first is the assumption that your competitors are making a profit with that price. Even big corporations can have the wrong price and take a bottom line beating. While I hated hearing it as a kid, this type of pricing has me quoting my mom:

"If all your friends jumped off a bridge would you jump off too?"

The second problem with this approach is apples, or perhaps I should say apples to oranges. How does their expense structure stack up against yours? Is this truly an apples to apples comparison? Or did some Florida oranges sneak in? Even if, and that is one BIG if, their product is priced correctly, your expenses may be higher which would result in a price that is too low for your business.

In fact, if a direct competitor is an exact clone of you, how do you stand out? You can't be a leader if you're following someone else.

Small Business Pricing Mistake #2 – Death by 1,000 Cuts

When working with clients on their pricing I invariably hear, "Why are you asking about that? It's such a small amount?" This profit killer isn't a drive-by, it's death by 1,000 cuts (yes that was really a form of execution). Small doesn't mean harmless.

Consider a weekly expense that is $5. Seems like peanuts in the grand scheme of things. Now multiply that number by 52 weeks, at $260 it doesn't seem quite so small. What if you were ignoring five different $5 expenses every week? That's $1,300!

Small things add up, ignore them at your own peril.

Small Business Pricing Mistake #3 – Why Are You Working for Free?

Many entrepreneurs assume that their pay is in the profit margin. Wrong. Profit margin is what your company earns. What about your time? If you did that same work for another company wouldn’t you bill them? Any product or service you sell involved some of your time, shouldn't you be paid for it?

Look at it another way. What if someone else had done the work? Wouldn't you have to pay them? Calculate the cost of your time (if it helps, imagine you're the employee) and include that in the price. And don't forget to actually pay yourself.

If you still want to work for free give me a call – I have plenty of projects on my desk!

Final Thoughts

Have you made these pricing mistakes? Are there others you struggle with? What would be the easiest for you to fix today to grow your bottom line?

Oops Photo via Shutterstock

From Small Business Trends

3 Common Small Business Pricing Mistakes

Small Business Awards and Contests You Should Check Out

Posted: 06 May 2012 10:09 AM PDT

Apply for a contest or award today — there are good business reasons to do so. First, you get recognition and publicity for your business — and that’s just good marketing. On top of that, it’s good for employees. You give your team something to excite them and to rally around. Finally, awards are good strategy: being nominated and winning can set your business apart from competitors.

But remember, YOU must make it happen, by applying for awards. Don’t be shy — nominate your company. Or nominate a customer or client for an award and show them you care about THEIR success and want to honor them.

The list of awards and competitions below is brought to you by Small Business Trends and Smallbiztechnology.com.

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National Small Business Week Video Contest
Enter by May 11, 2012

In celebration of National Small Business Week 2012, the U.S. Small Business Administration is looking for creative videos from small businesses that show how they have been assisted by an SBA program or service (counseling, training, guaranteed loans, government contracts, disaster recovery, etc.). The video contest will help showcase small businesses across the country that SBA works with on a regular basis. Winning videos will be shown on May 23, 2012 in a Google+ Hangout with the SBA and the White House.

Win FREE Business Cards From MOO
Moo business cards Enter by May 12, 2012

If you have a business with 10 or more employees, you are eligible to enter the random drawing for a chance to win $1,000 in free businesses cards, from Moo.com. The details are here. It runs through May 12, 2012 — so don’t wait. And if you have clients or business partners with 10 or employees in their companies, please let them know about this terrific opportunity. Enter the giveaway here.

The New York Enterprise Report 2012 Small Business Awards
Enter by May 21, 2012

The New York Enterprise Report Small Business Awards is the annual awards program honoring the achievements and accomplishments of the 500,000+ small businesses throughout the tri-state area. The Small Business Awards will recognize 5 small businesses for their best practices and 3 businesses under the “Best of the Year Awards” categories.

A panel of experts in the related fields will judge all award packages. Awards will be presented to those companies that have shown the ability to use their best practices and implemented programs to generate competitive advantages, revenue profits and/or long-term value. Please note the criteria and requirements listed on the awards website.

Small Business Influencer Awards 2012
Enter by July 15, 2012

The 2012 Small Business Influencer Awards are now open for nominations! The Influencer Awards honor companies, organizations, apps and people who have made a meaningful and lasting impact on the North American small business market. Impact may mean (i) providing products widely used by significant numbers of small businesses, or (ii) influencing significant numbers of small businesses by being a thought leader, or (iii) providing information or services of note to significant numbers of small businesses. Nominate here.

Accelerate Michigan Innovation Competition
Enter by August 8, 2012

The Accelerate Michigan Innovation Competition is an annual international business plan competition in Michigan. The event is the world's largest business plan competition with more than $1 million in prizes. The goals of the competition are to promote Michigan as a venue for innovation and opportunity and stimulate job creation.

The New York Times Make Your Pitch Contest
Enter by August 29, 2012

Submit your pitch on video, telling about your product or service, your marketing plans, your customer base. Tell what makes your business different — why it is one to watch? Do you need capital? If so, how much and what for? Most important, how are you going to make money?

All video pitches that meet the submission guidelines will be featured on The New York Times small-business Facebook page and selected pitches will be featured on the New York Times You’re the Boss Blog.

To find more small business events, contests and awards, visit our Small Business Events Calendar.
If you are putting on a small business contest, award or competition, and want to get the word out to the community, please submit it through our Small Business Event and Contests Form (it’s free).

Please note: The descriptions provided here are for convenience only and are NOT the official rules. ALWAYS read official rules carefully at the site holding the competition, contest or award.

From Small Business Trends

Small Business Awards and Contests You Should Check Out

Small Town Rules for Big Success in Business

Posted: 06 May 2012 05:30 AM PDT

Small Town Rules I am always excited to see the results from blending offline and digital business behavior. Blending ideas has fast become a hallmark of internet-fostered communication, as well as success.

One book that details the best results of this blend is Small Town Rules, How Big Brands and Small Businesses Can Prospect In A Connected Economy, a wonderful distinct guide written by Barry Moltz (@barrymoltz) and Becky McCray (@BeckyMcCray). These terrific authors are no strangers to the small business community, both nationally recognized for their entrepreneurship consultations and numerous appearances in publications.

McCray, a Hopeton, Oklahoma cattle rancher and small business owner, is best known for Small Biz Survival, an top small business online resource for rural businesses, and Tourism Currents, a social media resource site for the tourism industry she co-founded with Sheila Scarborough. Moltz is a popular consultant who helps small businesses get “unstuck” and is host of the blogtalk show Business Insanity; He has written three books including You Need to Be A Little Crazy: The Truth about Starting and Growing Your Business and BAM! Delivering Customer Service in a Self Service World.

Anticipating a great thought-concerto on business and community, I was well rewarded for reading valuable notions from McCray and Moltz. Their ideas speak sharply to business owners seeking the best practices of business development.

Small Town Rules notes that the recent economic changes have altered the ways small businesses must operate to survive. The result is a new small town paradigm for businesses of all sizes, with advantages and disadvantages altered in illuminating ways. For example, Moltz and McCray note that geographic location, once advantageous because "Craftspeople wanted to be located near raw materials.…Merchants had to be on the trade routes", is an eliminated factor.

"Fast transportation of physical goods reaches most populated parts of the world efficiently. The introduction of containerized intermodal shipping … reduced freight costs and remade the entire industry of moving goods overland and by sea."

The lack of geographical attachment, called "Anywhere Anywhen", is now the new norm. Big businesses realizes that "jobs are also no longer geographically tied" while small town historic milestones make clear how the "new ways" have been with us all along:

"The loss of geographic advantage is nothing new for small town business owners. They lost their geographical advantages a long time ago with transcontinental railroads and interstate highways."

Moltz and McCray skillfully note small and big business perspectives, recommending approaches that merge business development skills with social media, networking sensibilities, and consideration of assets. This outlook helps the book relate to rural entrepreneurs far away from a metropolitan center as well as those in large urban centers who feel they are competing with everyone from everywhere. Take the suggestion of "rural sourcing" instead of simple outsourcing:

"Turning the disadvantage of a rural location into an advantage of lower cost, rural sourcing captures jobs that otherwise might be outsourced overseas. Rural service firms claim a number of advantages over global firms: shorter supply chains, better data security, intellectual property protection, cultural compatibility, and convenient time zones."

Small Town Rules provide what-to-do summaries in collalaries at the end of each chapter, while occasional segments focus on "powerhouse brands"– businesses well known but not always in the news, such as LL Bean and The Grasshopper Company of Kansas. Appendixes note varied resources from books to cloud-based business solutions.

Highlighted thoughts include:

When networking, beware of the CAVEs – Citizens Against Virtually Everything – those who resist the ideas to the point of derailment and missed opportunity.
Community means people communicate a lot, so make customer service a priority and "treat it like it's all you got."
Big and small companies are returning to the values of small towns – knowing your neighbor, incorporating voices from everyone who "steps ups and lead"
Plan for zero – being ready for economic disaster by diversifying income streams on a true pivot of sources, instead of any ol' service to attract interest (This is my favorite perspective of the book). "There are three ways to get ready for those zero times: question assumptions, know the seasons and cycles, and invest for the long term."

What books compliment Small Town Rules:

Locavesting — The financial resources showcased in this book matches the network resources given at the end of Small Town Rules
The Mesh – Need an idea that is unique in your region? Services and product ideas in the Mesh are a starting point to elaborate on the "Anywhere Anywhen" phenomenon.
Worth Every Penny — Read Anita Campbell's great review on a book that reinforces the importance of create a unique brand experience.
The Welcomer's Edge – Richard Shapiro's concept displays the way we engage customers leads to repeat sales.

Readers with small business dreams or brands looking to serve smaller markets will benefit from Small Town Rules. Pick up a copy to build a close business relationship with your customers, and to develop a style that competitors may never emulate.

From Small Business Trends

Small Town Rules for Big Success in Business