Cashflow Levers | PRICING


There is no other activity that has the most significant impact on your cashflow than pricing does.

An increase in price has the most significant impact on profit, as every dollar goes straight to your bottom line. The price will always have an effect that is 2 or 3 times higher than any driver.

With so much focus on increasing revenue and reducing costs, people often avoid the dreaded thought of increasing their price. We live in a world where we fear raising our prices because we think we will lose customers/clients.

Increasing your price goes hand in hand with showing additional value.

People pay a premium when they value your service, but more importantly, you need to be confident that your price point is set to attract a particular type of client.

I recently reached out to a social media company about their service. They came across like someone I wanted to work with, and when they asked me what my budget was, they pretty much said you’re not our ideal client, and you would be better off working with another company that supports your type of business. Some might be put off with that response, but because I have an appreciation for pricing and working with the right companies, I was impressed with their position and confidence in who they wanted to work with.

All too often, we get caught up in the notion that we need to serve everyone. There is no better time than now to zero in on what you want and what you are willing to give your customers for that price point.

Let’s say that your current margin is 20%. If you raise your prices by only 2% across the board, you may potentially lose 9% of your sales and still be ahead. What if you didn’t lose 9% of your sales by showing additional value to your product/service to counteract the mindset change of another price increase?

Pricing is irrational. We are always trying to put ourselves in the customer’s shoe and start to stress will they pay for that? Believe it or not, this isn’t the way it works.

Everyone makes emotional purchasing decisions when they are sold on the value and then realise the price (yes, me included).

If you would like to see the impact pricing can have on your business cashflow, feel free to schedule a call with us.

I would love to share the power of pricing with you!