By Janette Whitney, published on 20th September 2011

Are you finding business a bit slow? I know, you think to yourself, my prices are too high, I should cut them and that will solve the problem.

Wrong!

Cutting prices in response to a general slowdown in business is not necessarily the right move to make. A price reduction sends out a number of messages:

1. It devalues your product.
2. It may show that you had a high margin and generate comments from customers such as, ‘He’s cut his prices by 20% and I bet he’s still making money at the new price!’ The last thing you want to do is alienate your customers.
3. The customers who bought at the old price are not going to be pleased and may be reluctant to come back and do more business with you.
4. Lastly, it smacks of desperation!

Attributing a sales slowdown to your prices is the easy way out. Usually the cause lies elsewhere. Consider the following:

• Is your marketing still effective? Are you doing any? Don’t assume that word of mouth marketing will always keep a steady stream of customers knocking at your door.
• Has a new competitor arrived on the scene and is stealing customers away? If so, what is the competitor offering that you are not?
• Has your market changed? Have tastes shifted? A slip in sales may be a sign that your product is no longer in line with what people want.
• Has technology changed? Does your product stand up against the newer versions coming onto the market? What can you do to catch up?
• Are the competitors able to offer lower prices because they have sourced cheaper stocks/materials? When did you last negotiate with your suppliers? Can you buy more cheaply at different suppliers?

As you can see there could be a number of reasons for a decline in sales. Don’t go with the price cutting knee-jerk reaction – take a longer, more in depth look at your business for the real reasons.

You’ll be surprised how refreshing and more profitable a review of your business strategy can be.

Need an experienced and impartial professional to help you review your strategy? Then contact Janette on tel: 01403 733671 or email: jw@whitneyassocs.co.uk