When it really comes down to it, businesses are about the bottom line. But when it comes to novel ways to do so, many businesses find themselves struggling to come up with creative ways that don’t alienate their customer base. We’ve put together a short list that should help you, and might give you inspiration for some more creative ideas of your own! The main goal of these ideas is to increase profit margins without losing customers, but when too many are applied at once or they are applied too frequently, customers will take note and shop elsewhere. Act wisely!
One of the simplest improvements that can result in a big margin boost is the creation of bundles and package deals. While this can boost overall sales of your less-purchased items by matching them up with your most popular items, the most important aspect of it is that it shifts the focus from the prices of the components to the package as a whole. This allows you to manage subtle price increases on the component parts without irritating the customer.
Another useful tactic involves standardising your price increases and applying them on a regular basis. Typically, retailers raise prices once or twice a year as the distributors and manufacturers raise their own prices, without raising the ire of the customer. By that same logic, a very small price increase done several times over the course of a year above and beyond what the distribution chain would dictate allows you to ease customers into accepting a higher price.
Many businesses only raise their prices by the same amount a manufacturer does, to offset inflation and increases in production costs. However, simply because a manufacturer raises an item’s cost by a certain amount does not mean that retailer must follow that example. Slipping in small additional price increases at the retail end is an effective way of disguising the true nature of a cost increase.
Consider assigning a member of your staff to specifically manage all your pricing decisions. For small to medium-sized businesses, this might have to be a part-time assignment, but ensure that the person you pick has solid detail skills and is motivated to get the most profit possible. It will be their responsibility to live in the web of sales, costs, margins, and mark-ups, and identify trouble areas and high performers. Having a person dedicated to this task can help highlight potential gains and can have a huge impact on the end result, even if it initially seems like a waste of resources.