If you are not happy with your total sales and profits, then pricing may be the reason. In these cases, I recommend a combination of lowering prices in some areas and raising them in other areas. Generally speaking, lower prices should win more jobs and increase volume for jobs that are more commodity-oriented work. Luckily though, a lot of the jobs we produce are complex or require very fast turnaround. In these cases you can get premium prices.
Five Golden Rules for Pricing
Have a good handle on the market pricing, both nationally and locally. Use the industry studies and even conduct a local market study yourself. Regardless of your costs, you ultimately will need to price near your market pricing.
Not every client or prospect is worthy of obtaining the same price on the same job. You need to discriminate based on the value of the client or prospect to your business. Their payment history should be considered as well as the potential they have to give you more business or refer you to their friends.
Create “special” pricing for certain clients. The pricing can be higher or lower than your normal pricing, or just your normal pricing. Just calling it “special” shows customers you care about them. Web portals work well for allowing special pricing.
Customers are concerned about consistent pricing. Make sure your estimating system is setup to consistently give the same price every time. Customers know that the more they order the cheaper it should be. Use that to your advantage to gain volume.
Except in bid situations, never give your absolute best price initially on larger projects. If you have a good relationship with the client, they will tell you if they think the price is high. In this way, you have room to reduce the price. If you start at rock bottom, you have no place to go.
In summary, the pricing study is a great tool to establish pricing, especially in areas that are new to your business. The study will help you compare your pricing to the industry. With that said, you still need to have a strategy to make your pricing work your marketplace. Establish a pricing philosophy, and constantly monitor your pricing for jobs you get or lose. Finally, no one ever went out of business by charging too much, so do not leave money on the table.
The 2012/2013 NAQP Digital & Wide Format Pricing Study can be purchased at http://members.napl.org/Members/Store.
Mitch Evans is president of Mitch Evans Consulting (www.MyPRINTResource.com/10209474). His areas of expertise are in strategic planning, valuation, mergers and acquisition, financial planning, new technology, and “1-2-1” coaching. Contact him at 561-351-6950 or firstname.lastname@example.org.