In this economy, it’s hard to make money from your business. However, there are several ways that small businesses can increase revenue without spending more on marketing. If you’re looking for ways to improve profitability in your small business, keep reading!
What to do before you raise your prices.
Before you raise your prices, it’s important to do a little research. You’ll want to understand your costs and how much you can afford to raise them. This means talking with customers, who may be willing to pay more for the same product or service if they feel like they’re getting better value out of it.
You should also consider whether or not raising prices will actually have any impact on sales—and if so, how much? If you’re unsure whether or not this is true, then don’t worry: there are other ways of gauging whether or not people are willing (or able) to pay more than what they currently do.
Finally, remember that charging more isn’t always bad! It all depends on what kind of business owner/owner-manager/manager-owner etc., etc., etc., I’m sorry; I mean entrepreneur type person with whom we’re speaking here today which means whatever job title applies based upon whose perspective matters most here at our company which means why don’t we just go ahead and skip all these formalities altogether so long as everyone agrees beforehand such as myself here today who feels very confident about making decisions without consulting others beforehand because after all haven’t we seen those commercials where celebrities make decisions without consulting anyone else first?”
Understand your costs.
When you’re trying to figure out how much money you’ll need in order to make it, it’s important to understand your costs. These are the things that you can’t change—like rent and insurance—and fixed costs are those that don’t change regardless of whether or not there’s any business activity going on. Variable costs, on the other hand, do vary depending on how much business you do or don’t have: if there’s more demand for your product or service (or if they’re cheaper) then those expenses will increase accordingly.
Be ready to talk to customers.
As a small business owner, you’re going to be asked a lot of questions. Be prepared for them and ready to answer them.
- If a customer has a question about your products or services, be prepared to answer it by explaining why these prices are different from other stores in the area. This can help set up an opportunity for negotiation if it becomes clear that there is enough room between what they want and what you can afford as well as how much time it would take on your end (and theirs).
- If someone asks why you raised prices at all, try not just saying “because I can afford it now” but also talking about how this will help pay off debts incurred during the winter months or how much extra money has been generated through sales over last year’s totals (and don’t forget about tax deductions!). You’ll also want this information handy when negotiating further discounts with clients—they may even offer their own price cuts if they feel like they’re getting good value out of what they’re buying!
How to talk to customers about raising prices.
You can’t make more money with your small business if you don’t talk to customers about raising prices.
Many small businesses are afraid of talking about price increases because they don’t want to upset their customers or be seen as greedy. It’s important, however, that you let them know what the new rates will be from time-to-time so that there’s no surprise when they receive their bill at the end of each month. If a customer doesn’t think he’s getting a good deal on any given product or service at all times, then it may be best for him not to use that supplier again—even if he loves his products!
Don’t be afraid of charging what you’re worth.
If you’re not charging what you’re worth, such as $150 per hour or $50 per hour, your clients will know it. They’ll ask themselves why they’re paying so much for something that could be done cheaper somewhere else. And if they don’t like the answer to that question, they won’t hire you again—no matter how many great reviews and recommendations are on your site!
You can also charge more than what others are charging for similar services by finding out what different people in your area are willing to pay for the same thing (i.e., “I charged $200 last month; this month I’m going up to $250.”). It’s important not just because it keeps you from losing money but because sometimes people need a push toward spending wisely when there isn’t a lot left over after covering expenses (like rent). A little extra cash every once in awhile might be all it takes!
Raise your prices enough that it’s worth it.
The best way to know if your prices are high enough is by asking yourself these questions:
- Will I lose customers if I raise them?
- How much should I raise my prices without losing too many of my current customers?
These questions will help you determine whether or not it’s worth it for you to increase your prices. If the answer is no, then don’t do it! You should always be looking out for ways in which your business can improve itself so that it can be both profitable and successful. However, if the answer is yes (or if your business isn’t doing well), then definitely go ahead with raising the price of whatever product or service that needs an increase—and make sure there aren’t any discounts available beforehand!
Don’t cut into your margins too much when negotiating prices with clients.
When you’re trying to make more money, it’s important not to cut into your margins too much. This is especially true when negotiating prices with clients or vendors. You should be willing to walk away from the table if they don’t meet your price point and give them a reason why you’re leaving. It’s also important that you don’t be afraid of asking for more money than what they initially offered because this will show them just how serious you are about growing your business in this way—and if nothing else, it’ll keep everyone involved on their toes!
Charging for services will help you make more money than selling products.
If you’re selling a service, charging for it will help you make more money than selling products.
- Services are more profitable than products: The main reason why services are more profitable is because they can be priced higher and charged per hour or per project. This means that if your service takes a long time to complete, and that time is worth something to your client (in addition to the fact that it’s hard for clients to find someone who knows how to do what they need done), then charging by the hour or project will give them incentive to hire an expert like yourself instead of trying out some other freelancer who may or may not be as experienced but also won’t charge anywhere near as much money!
- Services are scalable: Services require less capital investment than products; therefore scaling up becomes easier when doing so with services rather than manufacturing goods which requires large amounts investment upfront before even starting production.”
Asking for repeat business and referrals can help bring in more revenue, but don’t count on them as a way to increase sales in the short term.
Asking for repeat business and referrals can help bring in more revenue, but don’t count on them as a way to increase sales in the short term.
Repeat customers are valuable because they spend more money on your product or service than do new customers. So if you’re able to get a returning customer who does not require any training and has no questions about how your product works, then this person is likely going to be much more willing and able to pay you for it than someone who is just starting out with their business.
Referrals come from satisfied existing clients who refer others based on how well they were treated by your company when they were referred by someone else (or even if there was no referral at all). The best way I’ve found for getting referrals is through word-of-mouth marketing: writing reviews of your business online; talking up other small businesses at events; asking people what they think about working with me; etc., etc., etc….
There are several ways that small businesses can increase revenue without spending more on marketing, including raising prices and being strategic about selling services instead of products.
There are several ways that small businesses can increase revenue without spending more on marketing, including raising prices and being strategic about selling services instead of products.
- Raising prices. You may be able to charge more for the same thing if you have a loyal customer base who trusts your quality and service.
- Selling services instead of products. If you offer an essential service like landscaping or home cleaning, consider offering packages with additional services as an added bonus for customers who use this as part of their package (for example: lawn care every two weeks). Customers will appreciate it because they’ll save money on buying everything separately!
- Ask for repeat business and referrals from previous clients or prospects who were happy with what they got from working with you in the past (or even just one time). This is another way to leverage word-of-mouth marketing since people love telling others about how much value they got out of their experience with certain companies/businesses; especially if those experiences were positive ones!
Conclusion
While it can be difficult to increase revenue for a small business, there are several ways you can start doing so without increasing your costs. If you’re not sure what to charge or how much is right for your business, try asking customers what they think would work best for their needs. Asking them will help you understand what they want from you and how much they’re willing to pay for the service or product that would make them happy. You may even find out that there is no market demand for your product!
If raising prices seems like too much work though then maybe consider selling services instead because this will allow you more time on other projects while still making progress towards generating revenue.
