Pricing In Essence

How do you explain to your customer the fact that price is going to increase again, although economy is as slow as ever?  That’s our new dilemma in recent 20% price increase from our main supplier.  We however, happily comply and in due course will pass on the increase to our customers.

The way we look at it, the cost at which we can acquire the goods matter a lot.  However, it matters more that we can still sell them at good margin without losing any previous profits.  When we start to struggle to recoup our margins then we can be sure that the price increase cannot justified, i.e market determines otherwise.

This same principle applies even when suppliers drop their price.  It might sounds fantastic knowing cost of goods are dropping, but guess what – the end results might not be so great.  Because it might be an indications that market price is also dropping.  The big question is then, are we selling at the correct pricing point?  And if we’re not, can we recoup the margin if we do sell at correct pricing point?

Seems like at the end of the day, it’s not really about choosing the cheapest suppliers out there.  Maybe it’s more important to choose those suppliers that we can work with, where we can get market insights, who can appreciate long term relationships, and definitely not those ‘playing the games’.

So, is pricing related to cost of goods, sales price, and margin?  Or is it more closely related to which suppliers you get your goods from?

The Little Things

What irritates you the most, customers complaints, suppliers keep pushing their new products, or those unexpected little things like forgotten internet password, run out papers, or even unexpected dead mouse under the fridge?

Sometimes we feel ready for the day only to find there are still unexpected little things out of our control.

These little things, although little, the total culmination of them can lead to severe migraine and rising blood pressure, accompanied with continuous swearing.  Wouldn’t it be nice if life can just be smooth and predicted?  Interestingly that’s how life is to some people, smooth and predicted.  The only problem is, these same people are just, well…predictable because nothing much going on there.  In other words, mediocre.

So, unexpected little things?  Maybe it’s all just part of the journey to greatness.

Remember, the number one enemy of greatness is indeed..mediocrity.

Tax time .. again ..

Not sure how it works in other parts of the world.  Here in the land of down under our financial year is from July to June.  So, being the 2nd of July 12, it is tax time for us.  Workers will most likely get a little bit of tax back, but businesses on the other hand must pay off their taxes which have accumulated in the last 12 months.

When we get into the day to day running of a business sometimes the last thing in our minds is simply – making sure we have enough cash reserve.  Too many times when we look down on the dangers of not having enough cash reserve, we are caught in cash flow problems.  Some of which come during tax time.

The habit of putting aside a little bit of cash is not only good for the rainy days (and tax time), but also at the same time increases our awareness of our financial conditions.

Now, there are two more things we can benefit, from this saving habits.

First, we get to accumulate cash which we can divert into investment.  Properties, equities, or simply plans and equipments.  Second, we get to be creative with our limited cash in our disposals.  We can do things with limited cash that other people have never thought about, simply because they’ve never been in our positions.  This will definitely push us further in our competitiveness in the market.

So, happy savings, build an investment portfolio, and be creative in limited cash environment.