Why Price Cuts Aren't a Good Idea For (Almost) Any Business

Our thoughts and prayers are with the people of Houston and, now, South Florida, who have been dealing with such a major disruption of their life — and during one of the busiest times of the year.

The IRS has set up a “catch-all” page for persons dealing with the aftermath of Hurricane Harvey, Hurricane Irma, and other natural disasters, which may be found here: https://www.irs.gov/newsroom/tax-relief-in-disaster-situations. And here's a link to a recent piece that delves more into money and data recovery in the aftermath of disasters - https://www.accountingtoday.com/news/irs-offers-taxpayer-disaster-planning-and-recovery-advice-for-hurricane-irma

Of course, if you (or your friends) have been affected in any way by any of these calamities, we are here to help! Allow us to assist you in sorting through the financial muck so that you can focus on cleaning up the rest of your life.

Before I go into my topic for the day, a short reminder.

The estimated tax payment deadline for the third quarter is Friday, September 15th. These figures are for those whose income is not covered by payroll withholding. If you're an independent contractor or operate a business, give us a call to set up a more convenient and potentially tax-saving manner of filing your taxes!

And, since we're on the subject of Charlotte businesses, I have far too many friends who are either starting one or trying to turn around a failing one by following this idea. That would be a miscalculation.

Why Price Cuts Aren't a Good Idea for (Almost) Any Charlotte Company. “How many things in your life do you do automatically, routinely, that is a waste of time but you don’t take the time to remedy them?” -Robert S. Scott

I talk about how to price their services all the time with my Charlotte company owner customers. We regularly hear customers say things like, "Well, if that were in my price range, I'd buy it." Many business owners are enticed by this idea to cut their pricing in order to sell more things.

Price reductions, on the other hand, as you may be aware, can often create more difficulties than they solve. For instance, price decreases…

• Reduce net earnings
• Cause lower-quality products to be purchased
• Raise client demands to cut the price even further!
• More sales are required to make up for the income shortfall
• A higher quantity of products is required

And, in the end, someone will always be willing to close their doors faster than you.

Keep in mind that cost is not a gain. The price of your product has no bearing on when a sale is closed. Customers and prospects will buy your products/services regardless of the pricing you set if you properly "sell" them.

That's the simple fact, and you've probably noticed it in your own shopping habits.

If a customer or prospect doesn't buy and claims the price was a factor, you can bet they wouldn't have bought regardless. It is your job as a small business owner and marketer to sell your products and services.

However, the art of selling has nothing to do with the product's price.

When your contacts learn about the pricing, they should be determined to buy regardless of the cost.

So, to market to your customers and prospects, look for “real” benefits (worth). You've got a customer if you can help them see how amazing their life is with your goods. When you bring up their current discomfort, your contact will go to great lengths to alleviate it.

Set your pricing and stick to them. If you've done your marketing right, you'll still have clients eager to do business with you.

Price gouging is a terrible thing — yet it's more of a figment of our imagination than a reality.

Charge for what you're worth. You've earned it.

Please feel free to forward this article to a Charlotte business associate or client who could benefit from our help — or simply direct them to our website. While most of these articles are about company strategy, as you are aware, we specialize in tax preparation and planning for Charlotte households and businesses. We also make place for references from reputable sources such as yourself.

Gratefully,