Raising Prices - 5 Points to Ponder
by Dick Milon>
September 2, 2021
Raising prices is a very critical point in any business operation.
Currently the labor market has put a considerable amount of pressure on bottom line profit, which in turn puts pressure on the need to raise prices.
The following are some “points to ponder” or suggested steps to consider in raising prices.
- Price raising is a strategic process whereby the operation is able to gain back some lost profits while not creating the “OUCH” factor with the customer.
- Step 1-- review a sales abstract for an extended period of time to see which are your top selling items.
- Step 2 – review the sales abstract for the top selling most profitable items.
- Step 3—know what your competition is doing.
- Step 4—decide what your plan should be:
- select a few high selling/high profitable items to increase.
- determine how much to increase these items
- determine to delete slow selling items
- understand your customer base in determining the amount of increase so as not to alienate the customer
- educate the sales team to improve suggestive selling techniques.
- increase all items a flat $ rate across the board. ie.. everthing goes up $1.
- implement some new items that are more profitable as specials
Hopefully some of these points may provide a clearer picture in managing this important part of your operation.
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Dick Milon has been a SCORE mentor for over 7 years. Dick has a degree in Business Administration and also did Executive Leadership Studies at Penn State. Education along with many years in the Hospitality industry working in all parts of the country, Dick is well versed in employee relationships and understands the problems of today's labor market on businesses.