Thank you for tuning in to episode 126! Today’s short and sweet solo episode is about the current pricing dilemma we’re all experiencing. It’s tricky dealing with inflation, but I’m sure we’ll iron out a few things for you in this episode!
Although we are currently not in a recession, the US inflation rate is at a four-decade high. With rising costs of goods and services, how does this affect you as a creator, small business owner, or service provider?
It’s easy to overlook making price adjustments since that seems to be a tough hurdle for many small business owners, but as the cost of goods rises, so must the price of a finished product that you create or the service you provide. You might feel it’s difficult to explain a price increase, but everyone has to increase prices in this climate. Your very own cost of living has increased, and by not changing your prices or fees, you’re only creating a deficit in your bottom line. If you have employees, they may too feel that their current wages are not quite making it as far as they were in the past. You may have to offer a pay increase to keep up with inflation, which should also serve as evidence that you need to earn more. It’s a tricky balancing act, but here are a couple of suggestions to achieve a happy medium.
Cutting your overhead expenses can be a quick and painless way of dealing with inflation. I find that this first step helps maintain focus and eliminate the excess. This could mean reducing inventory or spending less on marketing. Basically, you’ll need to look closely at anything that isn’t direct labor, materials, or direct expenses. I think of it as all the extras like travel expenditures, supplies, repairs, fees, etc. Ages ago, my high school business teacher Mr. Zablin reminded us to never pay for convenience. This would be the time to pay attention to that advice. I do think that it’s crucial to take advantage of convenience and shortcuts when it helps to increase productivity, but you need to way the cost and scale it back when times are tough. Cut back on all nonessentials and look to reduce production costs. This, in return, will increase your margins.
To reduce your marketing expenses, you could instead market to your current customers. Repeat customers are easier to sell to, will require less marketing dollars, and are, by far, your most valuable resource. I just read that a repeat customer is 67% more likely to purchase from you than the average 13% for a new customer. Here are a few ways to drum up repeat sales. Consider a special or private event sale for your past customers. This could be an after-hours sale, a special discount that can only be accessed with a unique code—contacting a customer a couple of weeks after a sale is also another great way to see if there are any other services or products that they would still like to purchase. Extending a special offer at this time might also seal the deal. One of my personal favorites that I know works well for me as a consumer is having a loyalty program. I have cards that give me a percentage off a service or a free donut at Stan’s when I spend a certain amount. Are you developing a new product or adding more services to your portfolio? If you are, try contacting previous customers to get their input on your new product. They’ll be more inclined to purchase once you launch. Lastly, if you’re able to capture customer information like a birthdate, receiving a special offer, gift, or coupon, is a great way to get your customer’s attention. When I receive a birthday offer, I rarely only go for my special reward. I tend to buy an extra treat, coffee, service, or whatever it may be just to treat myself on my special day. Ultimately, creating this loyal customer base will help increase repeat sales, and as I mentioned in EP 122 a happy customer is by far your best form of advertising. We all like to purchase from someone’s proven happy experience.
These simple tips should pave the way for increased sales while also reducing your overhead in this critical time. Let me know what you think!
Thank you for tuning in today and for your support! I love hearing from you, so be sure to reach out on IG @ _handmadeceo
Let me know if you have any show suggestions or ideas. Next week we will have a whole new month of fun, so be sure to tune in!
I’ll see you next time!
Today’s show is sponsored by Cubicle to CEO. To receive free access to “your first $10K month” masterclass and a bonus workbook, use this special link – zen.ai/handmadeceo