Have you ever wondered if you are pricing your products or services too low? During today’s broadcast Clay and Doctor Zoellner break down the 11 Signs That Your Pricing is Too Low including the following principles and more: Too much demand, break-even point, the carp, small profit margins, working with clients you don’t prefer, you aren’t keeping up with inflation, etc.
1. Too Much Demand – The demand for your product exceeds your ability to produce it (you can’t keep up).
Story – Sneaky Guacamole Food Ninja
2. Break-Even Point is Too Large – It takes your business more than three weeks per month to break even, yet you can’t produce any more products or services because the demand for your services and products is already too high.
Story – Orange Leaf
3. The Carp – Your prices are much lower than everyone else’s in your market and you have no specific reason for keeping your prices low.
4. Small Profit Margins – You are not making over a 30% gross profit margin on each transaction (if you are in oil and gas, commodities, and certain industries, you obviously can’t operate at a 30% profit margin, but in most industries, I would recommend that you aim for a 30% profit margin, minimum).
Story – College students at a CiCi’s Pizza
5. Working with Clients You Don’t Prefer – You keep finding yourself working with more and more non-ideal and non-likely buyers. (Hint: You want to work with fewer non-ideal and non-likely buyers and more ideal and likely buyers.)
6. You Aren’t Keeping Up with Inflation – You haven’t raised your prices this year.
7. 10 x Value – You are offering 10x more value than your competition.
8. Success is Not Possible – You have done the math and have determined that it is impossible for you to ever achieve both financial and time freedom at your current prices.
9. You Are Making Less and Less Every Year – The COGS (cost of goods sold) has gone up, but your prices have not.
10. Hourly Fee Based – You charge by the hour and thus the more efficient you get, the less money you make.
Story – Accountants creating billable hours
11. You’re Not a Baby Anymore – Your branding is significantly better than when you started; yet you have not raised your prices.