Never Lower Your Price Just To Gain More Business

This is normally considered for two reasons - either business owners don't know how to correctly price a product or they believe they have to discount to break into the market.

Remember: This is a bad habit to get into so never start it.

TIP: Lowering your price will result in low profits and poor cash flow.

You are far better off to sell less and make more profit than sell plenty and not meet your financial commitments.

To illustrate this further do the following exercise. The principle is the same for any product or service that you have to sell. Say you have 100 tenants all paying $80 a week and you want to put the rent up by $20 per week (providing it’s marketable).

Assumptions are that your tenants won’t be happy about it and some may even leave. So how many tenants can you afford to lose and still receive the same income as you had before the rent rise.

100 tenants (Rooms) @$80 = $8000
$8000/$100 = 80 tenants (Rooms)

You can afford to lose 20 tenants and it will not affect your income affected. The side benefits to having less tenants of course is: Less cleaning, less linen, less electricity, less wear and tear, less staff, less resources, less food and many other benefits too numerous to mention here.

The main benefit is you can go ahead and give yourself another pay rise when you fill the other 20 vacant rooms.

Remember: That is the power of increasing prices instead of discounting them to gain a perceived increase in sales.

About the Author
Dan is an Australian businessman his expertise is in the creation of businesses and building them to full potential. If you really enjoyed this, parts 2-5 are at http://www.commandobusiness.com