Content written for Electric City
Sometimes businesses are confused about the best way to make a profit. Is it by making the prices higher so that you have a higher margin of profit, or do you go with lower prices and try to sell more of your product or service? At Electrician Tulsa we have found that it is a very fine line. You can’t solely depend on always being the company with the lowest price and expect that you will always get more customers. If you go too low, then you risk losing customers who might think that you are using very low quality products if you are that much cheaper in price than everyone else. If you go too high, you miss out on a lot of customers solely because you charge too much money.
The tricky thing is, is to get the profit margin just right. First you need to decide how much money you need just to make for your company to break even. For example, At Electrician Tulsa, we have to figure out how much it costs us to make a service call. We have the money we need to pay the employee, the gas for the vehicle as well as the mileage, the cost of insurance and whatever other fees may be associated with a single house call. Then you need to decide what your profit margin can.
This is the tricky part because of course all companies want to make as much money as they can, but if you get too greedy then you will charge too much and customers look elsewhere for their needs. If you want to be competitive you need to do some research based on what your competitors are charging for the same service in the same region or area. Once you get the prices right you can then adjust them as necessary depending on several factors such as the economy or a higher demand. It is all about supplying the market with the right demand which is tricky because it is always changing.
The Best thing to do is to be flexible and to watch the market for change. It is sometime predictable and sometimes unpredictable, but either way it is the way you can tell if you need to charge more or less, when you can make more profit and when you can just get by. In a recession it is probably best to charge the minimum amount you can when people are really feeling the tight economy and don’t have much to give. However, in a great market then everyone feels a little safer and is willing to pay for quality. It all depends on the way that the market is going and how you are going to adjust to it. Those of us like Electrician Tulsa, who can adjust and figure out how to flow with the economy are usually the ones who can weather the storm and survive difficult times as opposed to those companies who can’t.