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Reviewing, changing and advertising prices
Your costs, competitors' prices and the demands of your target market may change over time. It is crucial that you review your prices on a regular basis so you have up-to-date information and you can make any pricing changes that are needed.
Review your prices regularly
Set up a formal review schedule (i.e. on a monthly, quarterly or 6-monthly basis) to help you keep on top of your cash flow and your pricing strategy. Key events that should prompt a review of your prices include when:
- a product or service is not selling
- you start to sell a new product or service
- your costs change
- your competitors decrease or increase their prices
- your competitors introduce a new product or service
- there are changes to your industry or the Queensland, Australian or international economies.
Change your prices with care
When changing your prices you must explain to your customers how this change benefits them. You need to tell customers how the new price gives them more value for money.
It is easier to lower the price you charge if you have lowered your costs. However, be wary of changing the quality or specifications of a product or service just so you can decrease the price. These changes may not appeal to your customers, even at a lower price.
If you increase your prices then your customers will want to know what extra value they will receive. Many customers are price-driven. In a competitive market, it is important to clearly explain the additional features, new benefits or improved service that customers will enjoy as a result of the price increase.
You may have increased your prices because your costs have risen. In this case, your customers may not want to pay more for the same product or service, and they may go to one of your competitors. To avoid this, you should promote the benefits of staying with your business. You could promote your high levels of customer service, use loyalty discounts, or offer a discount voucher for their next purchase.
Make it easy for customers to see your new prices by changing all of your advertising material at the same time. Your website, newspaper or magazine advertisements, catalogues, shopfront posters and price stickers must always display your current prices.
Many businesses advertise their prices but some do not. If your pricing is competitive it can be an advantage to advertise your prices as this will encourage customers to buy from you.
This strategy can attract customers, but it also makes it easier for them to compare prices. Savvy customers may use your advertisements to negotiate a discount or a price-match from one of your competitors.
Learn more about advertising.
Update your website
Customers usually expect to find a great deal of information on your website, and many will visit your website to research your business before they make contact with you. Make sure that all product and pricing information on your website is up to date.
Find out how to create a website.
- Your pricing must be fair, accurate and displayed correctly. Learn more about legal guidelines for sales practices including pricing.
- The Australian Consumer Law applies under the Competition and Consumer Act 2010 to protect consumers and ensure fair trading across Australia. The avoiding unfair business practices guide helps you to understand your responsibilities under the law.
- Learn how to develop a marketing strategy for your business.
- Learn about online marketing.