Before I dive into those smart pricing tactics your business will want to implement right now, let’s revisit something I wrote about last week: planning for a Q1 analysis. Have you jumped on it yet? If you haven’t, let me just say, how well your 2023 shapes up could be determined by doing this one thing.
I’m more than happy to bring you some support on this front. Let’s talk:
calendly.com/tim-fin-opt
Now, because price point is ever important in a time when costs are ratcheting up everywhere, it’s a good idea to take out a pencil and notebook and pay attention.
We should all be putting ourselves into the place of a student when we see wise business decisions being made around us, and we should open our eyes to them.
One important component of any service or product is pricing — and specifically a strategy around it. It’s an under-appreciated component of a great business. So many Restaurant small businesses go out of business or get into a cash flow crunch simply because they get trapped into thinking about their pricing in the wrong way.
When you differentiate yourself based on price, you simply cannot provide value. You end up competing on the wrong playing field.
Sure, while price competitors have been in operation since the beginning of time, it’s important to understand that if YOU want to build a sustainable, scalable, and (one day) SALE-able business, a core foundational piece of that puzzle is that you must be charging enough for your services.
“Is that even possible in this economy?” Absolutely.
It better be. But let’s talk more about pricing tactics…
Smart Pricing Tactics for Restaurant Businesses Right Now
“We are not permitted to choose the frame of our destiny. But what we put into it is ours.” – Dag Hammarskjold
Your Restaurant competitors (and many small businesses) are stressing and fretting over how to *survive* in this tough environment. Even while businesses are eagerly hoping for signs of improvement for the economy … they are, frankly, in operational survival mode waiting it out.
That means they’re committing some serious mistakes…and, as your advisor, I’d like to see you avoid their fate. Because if luxury brands like Louis Vuitton, Mercedes, and BMW are reporting profits, what are they doing that is smart?
It’s simple, really. People DO have money to spend … and if you’re not bringing that in, you need to find a way to show them that your place of business is the best place to spend that money.
You see, it’s all about the value. You have to be clear about the value you provide and convey it to your prospects.
So how can you do this? Here are some pricing tactics you can implement right now:
Smart Pricing Tactic #1: Treat yourself like you’re unique
Your prospects have no way to know if you are the best option for them. To regular folks, most options are the same — in almost every industry. So when you compete on price, you’ll get price shoppers galore, who see you as just like everyone else. But, you are *not* like all the other options… are you?
So, what makes you different? And how do you show that to the marketplace? That’s what you need to focus on and show the world. Your prospects must turn to you because they trust you and because they see your business as worth the money—not because you’re the cheapest option.
Smart Pricing Tactic #2: Clearly understand the EMOTIONAL outcomes for your product or service
Why can BMW charge such high prices for their vehicles and people still want to buy them? It’s because of the VALUE they’ve attached to their brand (i.e. social prestige, enhanced customer service, increased self-esteem). They’ve moved themselves out of the commodity market and into the heart, emotion, and primal urges of their clients.
You need to do the same thing in your business. Yes, Mr. Customer can receive a service for $XYZ … but what are they NOT getting when they work with that other option? Focus on these aspects. It’s not about the “feature” of your product or service…it’s about the intangible benefits that come from working with YOU.
Smart Pricing Tactic #3: Change the packaging for your pricing
For service professionals, there are only so many hours in a day, and you’ll reach an income plateau very quickly when you are billing by the hour. Not to mention that you have to start every month over at zero — and there’s no stability in that. So, my advice? Begin billing on a flat fee/value basis.
If you’re scared to shift, just think of the VALUE your customers will experience having a professional using flat fee billing. They won’t be nickel-and-dimed for every phone call, email, and fax that comes through the office. They can communicate with you as they wish without fear, and they can pick their price point of choice if you have multiple flat-fee options. And believe me, people are willing to pay more for certainty every time. It’s a win-win for them — and it’s very much a win-win for the health/sustainability of your business.
For retailers or product providers, you can only play “margin games” for so long. So, identify *monthly* services which might augment the experience of using your products. Consider what your customers WANT and the problems they face in using your services. Restaurants could initiate a “VIP club,” with special perks, automatic billing, and exclusive choices. Merchants can create enthusiast groups, or lessons and coaching.
The point is to go into the heart of your customer’s desires.
Remember this: People still have money to spend… even in this economy. And they NEED your products or services. Beyond pricing tactics, it’s up to you to convey the intrinsic value of working with you (even at a higher price point) to command the income level you want (and rightfully deserve).
I’m personally dedicated to your success. Can other accountants say that?
On your team,
Timothy Sernett