How Does Pricing Affect Your Profitability – Award Winning Accountant in London

How does pricing affect your profitability? Time, team or money, which is your biggest challenge? Today we’re going to be talking about pricing and how a mistake in pricing can cost you dearly.

The price of some of the things I notice a lot in businesses I visit and who work with me, and begin working with the Profit Multiplier Program, is the mistaken pricing methodology and mindset that drives most businesses.

For most businesses, pricing is driven by the customers or many businesses, pricing is delivered and driven by their customers but more often their competitors. If their competitor charges that, they believe that they should charge that.

I think it is an unnecessary mistaken penalty that you pay in business if you do not have your own pricing methodology. I’m going to give you an example.

Right here at the Mai Ping, they have a Spa Package which includes a massage, a spa treatment.

It’s a package and the package costs 2400 baht and that happens to be something like £30, £40,  maybe £45. So that’s what they charge.

Now in the street behind me, there must be at least 20 massage organisations and each of them range for their one-hour massage – given that they may think one is two hours, two and a half hours, right? Bear that in mind.

 

The ones across the road start at about £150 per hour up to £250 to £300 per hour.

That’s even £600 pounds. That’s a quarter of what the Mai Ping charges. Now, how many more clients do they have to get at £200 per hour than the Mai Ping does with £2400 per client? A whole load and that is the problem if you get your pricing wrong.

Now don’t get me wrong. I don’t believe the Mai Ping offers exactly what they do across the road.

I suspect the quality of the treatment here that I’ve experienced is far superior than some of the places across the road.

 

However, the cost of giving that extra experience, that extra skill, that extra care demonstrating the extra care is far easier than the pricing deferential would suspect. It’s expected to be five, six, ten times as hard but of course it isn’t. It’s positioned right. It’s packaged right. It’s presented right and when you’re in there, you’re treated right. I would suggest that you could do the same.

 

There are no clients in my Profit Multiplier Program that don’t want to give an excellent service. They all want to give a deeply fantastic service. But what pulls them back is the fact they’re trying to do a better service than many of their competitors at the same price as their competitors and that is not a tenable long term pricing model. It really isn’t a business model that I advocate and on our Profit Multiplier Program, one of the first things we look at is the mindset behind price and the pricing of packages within the organisation.

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