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Businesses can set different profit rates, for example 15% profit on supplies and materials, 20% profit on labour/time, and 25% profit on overhead. These more complicated approaches to pricing usually emerge in response to special needs of a particular business.
If your research reveals that similar products or services are available on market at a cost much lower than what you could offer, you may have to either adjust your profit margin, return you expect, or decide to provide enough specialized service or selection that market will pay extra. Alternatively, you may be forced to conclude that you cannot afford to make this item or provide this service and look for something else to do.
NOTE: Remember to cost materials at level it costs to replace them - NOT at original prices; include salaries as a business expense; include interest in your business cost calculations -- interest that could have been accrued had money used in company been invested elsewhere (i.e. a bank); make allowances for future refunds, servicing, bad debts, amortization of capital costs of equipment or machinery.
"Rules of Thumb" in Setting Prices Some types of businesses charge prices according to certain "rules of thumb": For example: price is always twice labour plus materials, or twice materials plus labour depending on which is higher; price is always materials and labour plus 20% for fixed costs, plus 25% for profits.
Calculating actual costs is only proven way to make sure your prices cover your costs. Labour/time charges are to be covered partly in costs of production and partly as a salary in fixed/operating or overhead costs.
In summary, key points to consider in setting prices are: marketing strategy and your immediate goals competitors' prices, and market market demand for product and consumer buying trends need to cover costs and provide an adequate profit.
Step 2 Envision Success
Successful entrepreneurs develop 7-12 strategies to use side-by-side on a consistent basis. The key to successful marketing on a small budget is consistency over a long period of time. This means advance planning and a strong commitment to a realistic, sustainable plan.
Here are twelve guidelines to follow when putting your marketing program together.
Think in terms of a marketing campaign, not single pieces. Each step you take should be part of a total plan that is unified in style and message.
Aim your message directly at people who can most benefit from your product or service, and who are in a position to buy. This is like aiming for bull's-eye rather than just shooting in direction of target.
Put yourself in position of prospect. If you received offer or message, how would you respond?
The goal is not to create a memorable marketing piece, but a piece to make your product or service memorable.
The amount of money spent on a piece has nothing to do with its success.
Sometimes simplicity is more effective that beautiful art and graphics. Avoid clutter. In fact, less is usually more.
Being clever, witty or funny just for sake of it is a dangerous game and usually backfires. Use it sparingly.
Aim for an immediate impact. You only have a few seconds to get prospects attention.
Limit each marketing piece to a single objective. If your goal is to get an appointment, stop there. Don't try to complete whole sale.
Make your most important point stand out. Sameness makes everything run together, rendering it "invisible."
Always call for action. Tell them what you want them to do.
Before making any absolute claims, be sure you are aware of all laws that might affect you. It is true that almost everyone would love to have world beat a path to their door. The truth is, most people don't even know (or care) that you have a door. To succeed in business
Step 3 Some Strategies to consider
Exhibiting at key trade shows where they'll get to meet prospects in person. Speaking at industry events. Pro-actively arranging personal meetings with major corporate prospects. Promoting business to previous clients and industry contacts. Creating a follow up plan for all contacts. Updating marketing material to address important client concerns (identified through in-house research), including creation of fact sheets to help clients make best decision for their circumstances. Advertising in niche trade publications. Look for media opportunities Write often Run mini-campaigns Run special offers Stress exclusivity Get involved in community Look for sponsorship opportunities
The majority of PR will have to be written, in one form or another Ė press releases, newsletters, brochures and adverts, case studies or articles. Different methods help businesses to get different messages across. But each one must be well written if it is to be effective. Some simple guidelines that will instantly improve your business writing are: Keep it simple: avoid using long or technical words. Be as brief as possible: donít use three words where one will suffice. Grab reader instantly: openings are all important. If you waffle on before putting your message across readers will switch off. Relate it to readersí needs: you know your product or service is best, but readers need to be told how it will benefit them. Be creative: everybody is swamped with business literature and you need to find ways to set yours apart from your competitors. Focus on people: people are generally more interested in other people than they are in products.
Step 4 Review and Adjust
This may be one of most important steps in process. Many a budget has been spent without any returns. Ensure that you review your efforts daily and don't wait to long before adjusting your strategy.
Learn more at http://www.my1stbusiness.com Ben Botes MSc. MBA, is an Entrepreneur, Speaker, Writer, Coach and academic. He is the founder of My1stBusiness.com, South African Business Hubs Join the My1stbusiness.com Reseller Program and earn 40% referral commission http://www.my1stbusiness.com/affiliate
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