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Raise your prices to cull demand so you can maximize profit with your current available capital until you have the funds for new capital to create more supply.[/financial advice from 24 year old with no financial experiencing or skills]
That has some truth to it. What falls under the change in price points, however, is a change in marketing, a change in wages, a change in sales process and pipeline....it isn't as simple as raising prices and all falls into place. Customers will want to see the change in perceived value too as a justification of sorts....and that falls under employees perception, too.
I'm not saying it's a bad idea. But I've been a part of entrepreneur networking groups for the last 4 years, and I've heard story after story after story of what actually occurs with raising prices with the end result in mind. One of my students parents owns a shoe store in the area and saw her business nearly fail when she raised prices with the goal in mind of pooling capital for future savings. Her sales dropped to nearly zero in an upper middle class demographic....the very demographic that marketing theorists say are the target audience for her higher-value shoes.
She changed her strategy, used her storefront exclusively as a warehouse, and sold online at lower prices, and watched her sales jump back up past solvency and into profit again.
So, there's another rant/truism....never assume that marketing to the wealthy results in higher return. They're looking for a good deal as much as anybody else and don't want to shell out cash just because. They buy on emotion and on covering their ***es as much as the next Joe Six Pack. Stunned the heck out of me as soon as I saw that after doing this for a bit.
At least in this economy it rings true. In my industry. That much I know.
I see. It depends on how your pricing structure is set up, and I was kind of assuming like a gym, with a yearly or sub yearly thing, but I realize that perhaps you might have it more of like a class based structure, I don't know. For what reason though, I followed with the faulty assumption that you can grandfather customers easily (like a gym, as if you could just control membership as it started to peak.
There's a lot of considerations in a dance studio I don't know anything about. To people sign up for month or several month long classes?
They have options based on levels of commitment. Our recreational program is a drop-in model with options to purchase classes in bulk, too. But our performance programs is at least a 6-month commitment with class attendance, rehearsal, and stage performance requirements.
We have other programs that are in our upgrade options, and all are similar to the performance program I mentioned above.
Oh man, it's like selling a car.
Yeah, why aren't people's businesses as simple as my economics textbooks portrayed them.. ERrrr. If only dance studio's operated Company X that manufactured Product A with Raw Materials B, C, & D, which could be substituted with E, F & C, all at various prices.
Oh well, you knew my advice would be useless. My dictating what prices you should give your customers is much like me trying to determine how valuable an aspiring jazz label will fare in Bulgaria. I don't got that St. Looey grit.
Seems like this thread was really needed!
I have been working on starting up a business over the last year and I am starting to get really annoyed at the guy doing my website. He seems to be taking his sweet time and stuffing me around, half effort etc cos we worked together previously. I guess the moral of the story is to not go through "friends" to save money -.-