There are a lot of reasons that lead to your decision to charge the various products and services that you offer at their respective price points. You may consider the costs that you incur to produce those items, common industry-accepted price standards, and watch for customer behaviors and satisfaction levels. Price changes can be met with customer frustration or may not be noticed at all. Customer response may depend on the other value-added services that you offer.
Determining whether to raise the prices for the products you offer customers is not an easy question to face. We’ve all heard stories of the push-back by customers when businesses hike up prices. However, prices can’t stay the same forever. Over time, the cost of raw materials can increase. Fuel prices also go up causing shipping rates to increase. You may be able to weather the occasional fluctuation; however, there is only so much wiggle room in profit margins. At some point, profit margins can wither away and lead to losses. You not only need to know what that point could be but be able to monitor these variables so you can take action before it’s too late.
An enterprise resource planning (ERP) solution can provide greater control and insight into your profit margins than an entry-level accounting solution or manual processes. An integrated solution, such as Microsoft Dynamics® GP, can be used by your entire team to manage inventory, manufacturing and distribution activities, as well as other core business operations. You can track supply chain and inventory data, for example, to monitor price changes in your raw materials and changes to profit margins. You can also monitor customer orders and sales figures to identify trends in buying behavior and the popularity of certain products. Should you make the decision to increase product pricing, you can monitor the customer response.
Your customers choose your business for your quality products, reasonable prices, and also for your customer service. You can get to know your customers even better with Microsoft Dynamics GP. Observe their buying habits and strategically stock your warehouse to anticipate replenishment orders as well as identify possible cross-sell and up-sell opportunities.
The delicate balance between price points and customer satisfaction can be challenging to maintain. Contact MIBAR.net for more information about using ERP to protect your profit margins while maintaining superior customer service.