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

Spa and Online Business Planning for 2009

Well, I hit the road running literally this year and now i'm sick...figures I ran into a wall! Anyways, happy to say that most of my business planning is done for 2009.

Having a plan/roadmap/sales forecast, whatever you want to call it, will help you stay focused and will be a cause for celebration when you hit your targets.

So for Le Petit Spa, we hit our 2008 target and were actually 1% over target for the year. December was a nightmare due to the SNOW more so than other factors. Staff and customers could not get to the spa or did not want to venture out into a dangerous situation (and rightly so!). We asked our customers to rebook to avoid a penalty which seemed to be a win-win on both sides. Thankfully, we have an online store at www.lepetitspa.ca for purchasing online spa gift certificates as we rely on an overwhelming amount of sales at this time of year. I am happy to say that we were only 10% under target so not bad. I was not able to drive my car for 3 and a half weeks!

For Spa Boutique, we finished 8% over target. Meeting your targets helps you to make sure you are setting the "right" goal to make enough money to pay all of your expenses. I find the hardest part is to STAY ON TRACK. It's so easy to forget about the plan, get excited about something new, come up with "new and exciting" marketing ideas...you get the picture. As an entrepreneur, it's our weakness - we love creativity and feel stifled with numbers.

Business is all about the numbers. You need to know your numbers and understand your cash flow at all times. I review my numbers monthly with my manager and quarterly with my staff at the spa.

The online business, www.spaboutique.ca, is small and we can review the plan weekly which is really important so that everyone is aware of the goal and there focus is on how to generate sales and keep customers happy. I really believe in profit sharing. Brian Scudamore, from 1-800-GOT JUNK, recommended The Game of Business book which really helped me to explain to my employees how the business works and how important the numbers are. I heard Brian speak at a SOHO event and was able to visit his business a few years ago so I understand now why he is successful.

Some tips to help you:

• To set numbers for this year, review the past few years
• Do a SWOT analysis - what are your strengths, weaknesses, opportunities and threats?
• Be realistic - it's going to be a challenging year; we set Le Petit Spa at 5% under 2008 sales and we feel very positive about this goal and for Spa Boutique, we set the goal much higher as we are opening a retail store in 2009
• If you are looking at expansion, then make sure you have done your research and you know there is a need out there
• At some point you have to make a decision on your numbers and bite the bullet
• Next step is to create a marketing plan - how are you going to promote your business? What marketing messages are going to be important for you? Social media is key to many businesses - FACEBOOK, TWITTER, BLOGGING, WEBSITE content
• Final step is to communicate to your staff and commit to the plan

It really is not that difficult but I think it's a bit scarey - did I set the right goals? Will we reach them? Make sure the goal feels right to you. If you have done your research and you are currently in business, then you are on the right track. If you are new to business, you will have to "take the plunge" at some point. Use experts, organizations like Women's Enterprise Centre that have business analysts, or take courses to increase your comfort level.

It does get easier each year. You need to put aside time to do the strategic work (which sometimes is the hardest part) and then "Just do it!" Enough of the excuses. Get on with it.

Here's to a GREAT year!

Nancy