Pricing is one of the most important aspects of your business

I have been wanting to blog about this subject for the last two weeks as I am reviewing my pricing for Spa Boutique and have had to revise my pricing THIS WEEK due to a few reasons. Pricing is one of the five P's of traditional marketing. It will drive whether you stay in business or not.

I want to share what has worked for me in the last few months. We are going through a trying time but those who "pull up their socks" and pay attention, will win big.

Pricing will determine your profitability. If you are not charging enough for your services, then you will go broke. It's that simple. You need to understand your costs and not overspend. If you charge too much, then your customers will notice as well. In retail, we deal with SRP (Suggested Retail Price) which is given to us by distributors and manufacturers, and we are told not to go below this price. If you choose to go above, then that is your perogative. Remember your customers will notice if you go too high.

Costs for any business will go up annually so it's important to keep up with price increases or understand which part of your business can maintain no increase. You need to analyze sales over the last year, how much it cost you to be in business (COGS) and understand what can the market sustain. I decided to increase my prices on December 1st, 2008 due to my gift certificate sales during the holiday season. I did not want to sell gift certificates at the old prices even with an economy that is slowing down.

This January, I was able to renegotiate with two of my skin care distributors for Spa Boutique to gain volume discounts. I decided to pass this savings on to my customers and be very competitive with American Crew and Joico hair care products as well as Gehwol, Intaglio, Skeyndor and Footlogiz products. I am interested in growing my customers and being able to offer more variety to my customers. Other small business owners may have made a different choice. My NEW PRICE does make sure that I can support the cost of the new product and shipping it as well especially if it is heavy.

I hope these sharings help you.

Cheers!

Nancy
Owner of Le Petit Spa, www.lepetitspa.ca
Owner of Spa Boutique, www.spaboutique.ca

Word of mouth advertising - how powerful is it?

Dear fellow entrepreneurs,

I built my business on word of mouth advertising. It was critical to our growth especially since we are a service provider. Customers came in and had a great experience. They then told their friends. We now differentiate ourselves with our ambience. Our tagline is "Discover our secret".

So part of our secret is to make sure that we tantalize the customer's senses with smell, touch, and taste. When you come into the spa, you smell lavender because we have many sheaths of lavender around the spa (large bushels). When you come in, we shake your hand, introduce ourselves and lead you to the right station in the spa. In terms of taste, we have special cookies and chocolates made by Patisserie Bordeaux and Daniel Le Chocolat Belge which are businesses "just around the corner" from us. These special touches are part of our ambience and if we run out (god forbid), our customers are not very happy so we always make sure that we have them in stock. Lavender tea made by Bayswater Tea Company on West Broadway is where our fruit rooibos tea with lavender buds added is part of the spa experience. Another option is to have a glass of wine by French Rabbit. So you get the picture.

Now these cookies have been with us for FIVE years. We tell everyone where we buy them so just in case you missed it, it was Patisserie Bordeaux....just around the corner. I don't go to Costco, I pay premium prices to support another local business and to also offer a French touch, "les petit fours" which means small cookie in French.

I have been told today that they will not produce anymore cookies for us until December 30th....so we called them and told them that we are a regular customer and we could order more next week to tide us over. We provided solutions but the response we received was "We had the same situation happen last year with you". Now as THE CUSTOMER, not sure why we are being spoken to this way especially in these hard economic times. They did not relent and now we are left with little choice - we must find a new cookie supplier because this customer service is horrendous. We spend $2,000 per year with this supplier and this customer treatment is UNACCEPTABLE.

Like I said, word of mouth advertising is VERY POWERFUL. Be very careful. It can work to your advantage or it can destroy you. Arrogance is not becoming to an individual NOR to a small business.

At Le Petit Spa, we work very hard to maintain our ambience and ensure that it is first rate every day for every customer. We spend time training our staff and talking to them about the importance.

Now I understand we all have bad days and busy times but every customer is important especially those that support you every week. Make sure you take the time to thank your customers every time they come in ESPECIALLY during these busy times.

Cheers!

Nancy
Small Business Owner