Planning for Profit

Plan for Profit- Don't Drop Prices!

You need to be aware of your local competitors and what they are charging. Be prepared to explain why your prices are higher. If you have never sold this product before, it is better to start higher and be able to lower your price than to have to raise the price.

How much is too much? Or too little? What if you have corn at $3.50 per dozen according to your calculations, and your neighbor is charging $3.00? Can you still make a profit by lowering your price? Sometimes it is better to sell fewer at the higher price than to sell more at the lower price. For example, suppose your margin on the $3.50 per dozen is $0.50 towards profit. If you sell 300 dozen, that will give you $150 in profit. If you dropped your price to even $3.25, you would have to sell 600 dozen to get the same profit. Is doubling your production AND your number of sales feasible? For a 7% decrease in price, you would have to sell twice as much.

You can stick with your higher price by differentiating your product. Use techniques like: signage, layout, local label, baker's dozen, recipes or add some other value to keep your price point and make the extra $0.25/dozen.

As your customers get to know you, you will build your reputation for quality and honesty. 60% of sales come from repeat customers. Yet, many people concentrate their advertising and promotion on the 40% that are single service sales. Satisfied customers will likely tell their friends and neighbors. The most effective advertising is word of mouth- and repeat sales are key to your success. It is much more difficult (and expensive) to secure a new customer than to get a current customer to buy more. Make your repeat customers feel special and keep them coming back for more.

Leave a Reply

Your email address will not be published. Required fields are marked *


You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>