To sell cheap or sell dear? There is the dilemma

Some years ago I had a computer accessories store. My father on the other hand had a small stationery and always insisted "sell high, do not give away your product". I, for one would rather sell cheaper but more volume . Perhaps this is also your dilemma in sales. And not for nothing because all entrepreneurs at some point you have to define their profit margins. And while we all want to win as much as possible, there are some important rules to take into account when setting prices that today I share:

1. Your costs rule. The first thing to consider when pricing your product are your costs. You should consider all costs of your business operation and not just the cost of your product. It is therefore essential to have a budget . Hence, it is extremely important to ensure that your costs are most favorable possible to compete.

2. People prefer the cheap. The studies show that consumers always prefer the cheap. The same economic crisis have prompted people to seek ever greater advantages in price. And that is what has given rise to many businesses selling secondhand items and bazaars as attractive options.

You can if you sell high added value. It is also shown that we are all willing to pay a little more for a product or service, if it represents us some added value as deliveries faster, cleaner, better care, delivery address and why not say "with a smile."

3. Purchase volume. Another useful strategy is to sell more volume purchases. Of course this requires more capital available but can work very well if you apply for example to products of higher turnover, not necessarily all of your inventory. That way, your suppliers will be willing to give you a better price and therefore your profit margin will be better.

4. Sell ​​more expensive products that require further support or guarantees. Some products are sold and do not know most of the customer. This is the case for example, some candy, office supplies and clothing. With these products you can sell cheaper. However, when your product is more sophisticated and may require some time extra support or extra work resulting from claims, then it should handle higher prices. This is the case of bicycles, toys, cell phones or appliances.

5. Do not try to get rich with your profit margin. You choose if you want to earn 15%, 25% or 40% of your product. If your costs are good you can get better profit margin, but the mentality of everything possible to get a line of products at the expense of "squeeze" the customer is not always as convenient.

6. Less margin may represent more clients. Remember that ultimately your business that keeps alive the customers are and if they perceive a high value and a great experience shopping in your business , then come back and top of that you refer to other customers , representing higher profits. Hence, if your profit margin is 20%, but this client again another 5 times more, in fact you would be earning the equivalent of 120%. And if you recommend 3 other customers that consume a product, then we are talking about a 180% profit. This is pretty subjective, but just want to give you an idea of the scope that can have the proper management of your business prices .

7. Use your common sense. Do not be guided solely by what the competition or your very pressing need of wanting to earn more. Use your common sense, listen to your customers and do what is most convenient for your business long term.

Conclusion:

To sell cheap or sell dear? is very difficult to answer in one word. Each product is different, as are the various commercial conditions in which we work. Like many other entrepreneurs develop skills , this is like a game. A game in which we managed to buy better, sell better and earn better. As always, my best success for you and your business!