To serve as the voice of the pest control industry, protecting the livelihood of pest management professionals while fostering education, promoting professionalism, raising ethical standards, enhancing environmental stewardship, improving public health and quality of life.
Pest Control 2010 is just around the corner. Mark your calendar for February 16-17 at the Kalahari Water Park and Resort in Wisconsin Dells. We have a great program in store for you. Topics include:
Watch your mail for the conference brochure, and we’ll have full details in the next issue of The Pest Dispatch . You can also download the conference brochure at www.wisconsinpest.com.
Tim Dollmeyer, ActionCOACH, Business Coach
One of the many challenges that you face as a business owner is how to price your products or services. Many take the approach of throwing anything against the wall to see what sticks. This approach could spell disaster financially, not to mention the effects on your public relations. For this important part of your business, it pays to take a more strategic approach.
Another unsure pricing strategy is the continual discounting method. You’ve seen the ads: “10% Below Retail” or “Guaranteed Lowest Pricing”. This translates to: “We add no value, so we can only sell on price”. This method typically attracts customers who only care about price.
So, what is a good strategy for pricing yourself so that you will sell profitably? Here are some things to think about:
1. Determine your costs. You should know all of your costs down to the last detail. Separate these into fixed costs that will remain the same whether you sell the product or not and your variable costs that fluctuate depending on how many products you sell.
2. Complete a market analysis to estimate the demand – a good practice is to use the median of your best-case and worst-case scenarios.
3. Complete a competitive analysis. Find out what your competitors charge for the same product or service. Pay particular attention to the competitors that deliver similar customer experiences to yours. Not every competitor can compare based on quality and service. Your pricing must reflect the overall value that you deliver. Also consider that, in many cases, the highest price suggests the highest value.
4. Determine your estimated breakeven. The formula for this is: Fixed Costs divided by Gross Profit Margin. Every dollar after that, multiplied by your margin, is profit. You could use some competitive benchmarks from step 3 to help with your estimates.
5. Determine how many units you will need to sell to cover your costs by dividing your Breakeven Revenue by your estimated Average Dollar Sale.
6. Lastly, test your pricing strategy on a few small segments of your target markets. Be sure to have your Unique Selling Proposition clearly laid out in your marketing. Surveying your current customers is a great way to do this before rolling pricing out to your prospects.
Once you have determined your pricing, measure all of the above on a continual basis. Be sure to build price increases into your strategy on an annual or semi-annual basis – after all, your costs will only continue to increase. Don’t get caught in the trap of only raising prices when your profit margins shrink to razor-thin. Besides, most of your good customers won’t even notice the increase – and those who do won’t mind.
Then go out there and make sure your customers realize the great value they get by buying from you!
Tim Dollmeyer is a licensed ActionCOACH business coach. If you have questions or would like to learn about coaching, email timdollmeyer@actioncoach.com.