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Manage For Profit

Managing a business for profit requires continuous reinvention and a watchful eye for signs of decline.

Congratulations, you survived the roller coaster of the building and growing your business. It’s important to continue with a growth mindset, however, today’s business environment requires constant reinvention to stay competitive. As you enter the Manage for Profit or maturity stage of your business life cycle, cash flow and profitability create a solid foundation. From a track record of annual growth to loyal employees and predictable revenue, this is the time to acquire other businesses, introduce new product lines, or consider selling the company to investors. Here you’ll find articles, guides and tools to help you avoid complacency in your success and stay vigilant for other opportunities or signs of trouble.

Unlocking the Value: How to Justify Your Prices to Customers

Matt Whetstone

By Matt Whetstone

Matt Whetstone leads First Bank’s business team. He leverages his lending expertise and understanding of business operations to make great things happen for First Bank clients in Southeastern Illinois and Southwestern Indiana. His team is focused on building relationships, helping clients manage risk and keeping businesses in our communities profitable and thriving.

Setting the Stage for Businesses

Businesses compete to make money and grow their customers. To survive and increase profits, these businesses may need to reduce prices or match their rivals' deals. However, this approach can be counterproductive if it leads to sacrificing profit margins. A good business plan and pricing strategy can help business owners confidently justify their prices.

Understanding Your Business Operations and Pricing Strategy

To defend your prices well, you must understand your business operations, like production, marketing, cash flow, and overhead costs. Knowing your profit goal, costs, and market rate helps you justify your prices and be more confident in your pricing decisions. This knowledge also helps in identifying your target market and tailoring your offerings to meet their needs.

Engaging with Your Target Audience: Building Confidence in Your Product

Engaging in meaningful conversations with your customers, especially your target audience, is crucial. When you highlight the primary advantages of your product or service, you help them see beyond the price tag.

Emphasize aspects such as superior quality, enhanced productivity, and comprehensive guarantees and warranties. These factors contribute significantly to the overall value of a product, helping customers understand its worth better.

Many customers value price and choose the cheapest options available. However, it's important to emphasize that the value of a product extends far beyond its price tag.

Leveraging Social Media and Market Research

Utilize social media platforms and conduct market research to connect with potential customers and understand their needs and preferences. This method helps attract customers and improve your business model and pricing strategy.

Negotiation Tactics: Staying Cool and Professional

During negotiations, it’s vital to remain calm, professional, and friendly, even if the customer is becoming emotional. Customers who focus solely on getting the lowest price may not be the best fit for your business. By standing firm on your prices and highlighting the long-term value of your product or service, you reassure customers that they are making the right choice.

Addressing Industry-Specific Vulnerabilities

Many customers experience frustration when tradespeople, like plumbers or electricians, fail to arrive as scheduled. Some people may feel stressed by pushy car salespeople or confused by complex contract terms.

By pinpointing these industry-specific issues, you can incorporate solutions into your business strategy, ultimately justifying your pricing and setting your services apart. For example:

  • We guarantee to arrive on time, or we will provide a free service or discount.
  • We offer a lifetime warranty (or a warranty for a specified period).
  • We ensure to leave the job site cleaner than we found it.
  • We will make it clear that all documents are in plain English and we will carefully explain them. This helps both you and your customer to avoid any unexpected surprises with the final price or terms. Additionally, it provides transparency that clients appreciate.

Shifting the Focus from Price to Value

A common trend for customers is to inspect products in-store before purchasing them online at a lower price. To counteract this, focus on addressing the common concerns associated with online shopping. Customers worry about the product's condition, delivery time, instructions, and process for replacements or repairs if it's faulty. By alleviating these anxieties, you can encourage customers to make their purchase directly from you.

Navigating Pricing Strategies for Businesses: A Community-Centric Approach

Our mission is to support businesses and make a positive difference in our local communities. We partner with businesses in Carmi, Grayville, Lawrenceville, Mount Carmel, Evansville, Haubstadt, Mount Vernon, Poseyville, Princeton, and Vincennes.

Our goal is to help you succeed by providing you with the knowledge and tools you need, like with our Business Management Consultation. Alongside one of our Relationship Managers and a member of our Senior Management team, we will discuss and uncover opportunities for your business with insights and customized reports from our focused, industry intelligence platform. 

To start improving your pricing strategy and taking your business to new levels, please contact us. Share your business's story, reach out via email or phone, or visit our convenient locations in Illinois and Indiana. Work with us to make your business unique in your field and maximize the potential of your offerings.

Your security and privacy matters at First Bank. Before you send us an email, please be sure that you are not sending confidential or personal information – like your account number or social security number. If you need to share this type of information with us, please call us at 1-800-538-3979.

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