Becoming More Profitable in 2019

I hope you had a great holiday season and took some time to recharge your batteries.

Now is the time to get back to work, the uncertainty with our government and economy is making today the day that You start to put the systems in place that will make you more profitable in 2019.

This is the first of a series of posts that will hopefully give you a few simple ideas that you can put into action to increase your bottom line.

Good – Better – Best Pricing Strategy

According to HBR there are 3 ways to use this price strategy.

  1. Going on the offensive
    • You can dramatically increase profits by creating higher-end “Better and Best” options.
      • For example – Six Flags Amusement Park has standard, gold and platinum passes. Gold reduces wait time by 80%, Platinum by 90%.  The idea is that at least half of the customers will upgrade to a “Gold” pass increasing profits by not actually doing any extra work.  Some ways customers have successfully put this strategy to use is selling higher end panels or decorative hardware.   More to come on this, keep reading.  🙂
  2. Going on the defensive
    • Is there a new lower price competitor in the your market?  Rather than reduce all of your pricing, creating a “Good” option is a solution.  You might find only 15% of your customers opt for the “Good” solution, and 85% are buying the better option which was your standard offering.
  3. Consumer psychology
    • 3 tier pricing helps differentiate you from the competitor.
    • People tend to choose the middle option.

Following are some areas of your business that you can use the GBB strategy.

Belts, Ties and Valet Rods – When it comes to your everyday accessories most homeowners don’t know what type of belt, tie or valet they are getting.  All they know is that they want one.  Rather than sell a $25 belt rack with every job, (that I hope you are charging at least $50 installed) maybe when doing a white closet you offer a $10 option (that you are selling for $25).

I know as you are reading this you’re thinking that you’re actually losing money by installing the less expensive one, but the reality is you could be pricing those high end accessories out of your customer’s budget.  They might opt to buy something on line and install themselves or worse give the job to a closet company that is offering less expensive options.  That high end belt and tie rack might not land you a job, but it could cost you one.  Our top selling “good” and “better” options are

Stay tuned for my weekly post on “Becoming More Profitable in 2019.”

I love hearing from you – please let me know your thoughts.

Do you have questions, comments – post below or email me at RDeMarco@Richelieu.com.

Thx for reading!!

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