This article is part of our series on New Year’s Resolutions for Small Business. Read them all here.
Provide goods or services, get money—it’s a tried-and-true model. But it’s not the only option for pricing your product.
Subscriptions are on the rise. Businesses are bundling items—everything from local organic vegetables to wine to professional services—and delivering them to subscribers. It can mean more predictable income, simplified logistics and stronger brand loyalty.
Robert Woyzbun, chief operating officer of Vector Media, says subscriptions can be a great way to make it easier for customers to buy—a key part of any pricing strategy. “If it’s a subscription approach, is it a better value proposition?” he asks. “Then it might make sense.”
Some subscription companies deal in repeating purchases, like shaving supplies or cosmetics. For customers, that can mean skipping the hassle of buying at regular intervals. Other sellers curate surprise packages of things like jewelry, artwork or local produce. A business that’s going to offer subscriptions needs to ensure prices will cover its operating costs—not just for the product but also for shipping, storage, packaging and marketing.
Daily deal promotion websites like Groupon can benefit small businesses if they’re used strategically. These coupon sites allow customers to purchase discounted gift certificates for goods or services, and while the craze has died down from a few years ago, the marketing model is still going strong. Utpal Dholakia, who did a 2010 Rice University study of businesses using Groupon, recommends companies use the site to build relationships with customers instead of one-time transactions. For example, a restaurant that offers $60 worth of food for $30 could split the deal to give $20 for $10, spread over three visits. Dholakia also suggests providing discounts on specific products or services rather than the total bill, and using promotions to clear out extra inventory or underperforming items.
Be warned that daily deal sites ask for deep discounts—most Groupon deals are at least 50% off, and the site takes half the earnings, leaving a small business to make 25% of its regular revenue. But such services can be an effective way to pull new customers in the door. At that point, the real trick is to woo them into becoming regulars.
MORE SMALL-BUSINESS NEW YEAR’S RESOLUTIONS:
- Get serious about social media
- Focus on small data, not big data
- Unlock bold new sources of capital
- Make the most of your millennial workers
- Reel in a huge client
- Evolve your marketing strategies
- How startups make marketing automation affordable for small business
- Why millennials shun sales careers, and what to do about it
- 3 key steps to training an effective direct sales force
- Why Sales Should Be About Relationship Building, Not Profit
- The age of global trade requires training a new kind of salesperson
- How Canada’s competition bureau makes products more expensive