Sunday, January 4, 2009

Business - Action Points in a Down Economy: Value and Pricing

In a down economy, horticultural businesses should spend more time looking at the value of their goods or services and pricing policies. The following are some points to consider:
  • Price appropriately. Do not think that lowering your prices will make your business more profitable. Often the opposite occurs as you will require even more customers to bring in the same income. Know your costs and price for the profit margin you need.
  • Test your market. Often raising prices is the key to remaining profitable. You may sell fewer plants or services but you make more from each. Many businesses have found that they are doing better once they have their prices in line with what the market will bear.
  • Do not discount across the board. Offering sales and special incentives are better practices. These have limits and bring in customers. Cutting prices across the board often does not stimulate demand and results in lower overall profits.
  • Examine your value proposition. That is, what are you offering of value to the customer in your product and services. Strive to offer better value by improving quality, improving service, and paying more attention to customers needs. Strive to differentiate your business and its products or services so that it is recognized and preferred by customers.

Information in part from a talk by Dr. Charlie Hall, Texas A&M University.

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