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Revamping your business pricing structure

During the economic downturn many businesses are seeing problems with the cash flow, and see their business struggling to stay afloat. If your business is not where you want it to be, consider doing a revamp on your business pricing structure. The following three questions will help you determine if you need to revamp your business pricing structure, and try something a little different.

Do you need to change your pricing model?

First question is simply, do you need to make some changes? If your business is booming, and you have satisfied customers, and are making a good profit, etc. then skip the rest of this article. However, if you find that you are not getting the business you desire, that your customer loyalty is lacking, etc. then considering a change to your pricing structure is a good place to start.

What are the perceived risks for your customers when it comes to your products and services, and how can you lessen them?

The next question helps you determine where to make changed to your pricing structure. Basically customers are looking at risk versus reward. They are not going to shell out more money on an unknown brand or product, but may be willing to pay to a certain threshold to give it a try. They may not be willing to put a lot down upfront for something, but would pay more over the long run. They may not be willing to commit to a full year, but month to month with a higher fee can be acceptable. So, ask yourself who your consumers are, and what their perceived risks and value are when it comes to your product or service. What can you do to better address this? For example, let's say you offer housekeeping services. If you are currently selling housekeeping packages, where they buy 3months, 6 months, or 9 months worth of cleaning, consider lessening the risk by offering individual cleanings, or a 1 month package. This lessens their risk, and promoted their purchase of your product.

Are you trying to understand your customers and their changing needs?

Before the current economic state, consumers may have been more willing to shell out more money up front, or commit to longer term options, however, needs change, and the fear of an unstable economy has lead to people wanting shorter commitments, less upfront costs, etc. If you take the time to understand you customers and their needs, you can create a pricing structure that addresses those needs, assuage their fears, and allow them to become loyal customers on their terms and comfort level.

It is far easier to retain customers than gain new ones, so changing your pricing structure, adding a freebie, or incentive, and making your product or service not just more affordable, but more comfortable for your consumers can help you improve cash flow and keep your business above water.

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