5 min read
Top strategies for making your product price competitive
You’re operating in a pretty challenging business environment these days. Banks are demanding strict credit terms, customers have higher expectations than ever and your competitors are finding more innovative ways to outwit and outplay you. You obviously want to be competitive in business – and this means selling your product at a price that competes with the other players in your market. But, you can’t rashly cut the asking price of your product at the expense of important things like quality or upholding excellent customer service. So, what is a business owner to do?
Here, our experts tell their three top strategies to making your product more affordable for your customers so you can stay competitive in the current market, including:
Looking for ways to reduce your operating overheads
Improving the way you do business
How getting paid faster can make your business more competitive.
Reduce your operating overheads
Reducing your operating overheads means you can sell your products and services for less while maintaining the same profit value – which means you can compete with aptitude, gain market share and ultimately increase your profits.
Operating overheads can be a killer in tough times because unfortunately they don’t all scale downward along with your revenue. On the upside, there’s also lots of opportunity here for you to extract the hidden value out of your operating model. For example, our research tells us that many business owners could reduce the time they spend on payment administration and financial reporting by as much as 95 per cent if they were to automate more tasks using the right payment software.
Improve the way you do business
In the current market, businesses everywhere are subject to the challenges of operating in a credit-crunching post-GFC environment. Check out our article about ‘how to increase your cash flow without increasing your fees’ as an introduction to the concept of improving the way you do business as a strategy to increasing your competitiveness.
Get paid faster to improve your cash flow
It’s a sad fact that business insolvencies are on the rise as a result of cash flow problems. In Australia, a whopping 60 per cent of invoices are paid late – with the average length of time for payment being 53 days. With this in mind, now is the time to turn your attention to improving your cash flow so that your business doesn’t contribute to statistics like these. One sure strategy to improving your cash position – without increasing your fees – is to get paid by your customers faster. Here’s how it works:
Lisa runs a glass factory that produces custom branded glass pieces such as fences, signage and boardroom tables for her corporate clients. Currently, Lisa’s payment terms are 30 days after delivery of the finished product, which leaves her footing the bill for the materials, production, labour and delivery of each order before the customer has received an invoice. This leaves Lisa in the position of needing to ‘borrow’ from her own cash reserves for 30 days in order to fulfil every customer’s order – and this is assuming her customers will pay on time which is, according to our research, unlikely.
Consider how you could tweak your payment terms to speed up your inbound cash flow and stop your custom of temporarily footing the bill for your customers’ orders. It will free up your cash reserves and help you to gain an edge over your competition.