Consider price bundling for more profitable sales....

Price bundling is a strategy whereby a seller bundles together many different goods/items being sold and offers the entire bundle at a single price.

There are two forms of price bundling -- pure bundling, where the seller does not offer buyers the option of buying the items separately, and mixed bundling, where the seller offers the items separately at higher individual prices. Mixed bundling is usually preferable to pure bundling, both because there are fewer legal regulations forbidding it, and because the reference price effect makes it appear even more attractive to buyers.

Motivation behind price bundling

Exploit different valuations by different buyers

Suppose there are two buyers,  and , and two products,  and . Suppose buyer  values product  at  units above the cost of production, and values  at  units above the cost of production. Suppose buyer  values  at  units above the cost of production, and  at  units above the cost of production.

The ideal thing for the seller would be to practice price discrimination: charge each buyer the maximum that buyer is willing to pay. However, this may be forbidden by law or otherwise difficult to implement.

Instead, the seller can pursue the following bundling strategy: charge slightly under  units above production cost for the combination of  and . Since both buyers value the combination at  units above the cost of production, this deal appeals to both buyers. This allows the seller the obtain the entire social surplus as producer surplus. (It isn't true in general that bundling allows the seller to capture the entire social surplus -- however, bundling does allow the seller to capture more of the social surplus in many situations).

The seller can even make this a mixed bundling strategy: offer both  and  individually for  units above the cost of production, and offer the combination for slightly less than  units above the cost of production.

Chris Wilkinson.                              

Certified Business Behaviour & Attitudes Analyst.               

Business Coach.

Tel: (905) 275-2907 (Mississauga).

E-mail: buspilot@bell.net

Overcoming Your Fear Of Sales Rejection When I present sales training workshops, I often hear a variety of reasons for not following up opportunities that emerged at networking events. Here are some examples: §                       I don't want to seem too pushy §                       I'm too busy §                       I struggle to pick up the phone §                       If they want my services, they'll call §                       I keep meaning to do it, but somehow or other, don’t get round to it §                       I've lost their card §                       I'm not sure how they're going to react to me §                       I'm not really certain that I'm going to get anything out of it §                       I can't deliver what I thought I could §                       I'm not sure what to say §                       I've heard something adverse about them §                       I fear a no All sales training courses say the same about these reasons: they are driven by the sales person's key fear of rejection! That means, if any of the above reasons apply to you, you're normal! That’s a good start, isn't it!

10 Likely Consequences Of Not Making The Call

If you have agreed to call someone to follow up a networking event, and youdon't call on the agreed date, the consequences are:

1.                  The prospect will assume you don't want his/her business. "Well, he was a waste of time."

2.                  You are unreliable. The prospect will think "If he can't be relied on at this part of our relationship what are things going to be like if I did become a client?"

3.                  You can't be trusted. You promised to call and you broke your promise.

4.                  Your reputation will be tarnished. That in itself is bad enough but you are representing others, i.e. your company. Their reputation will also be tarnished. This is a serious consequence. If you are the first person they have met from your business the whole of the company will be judged on the way you behaved. Unprofessional, unreliable, untrustworthy, the list goes on. You have one massive responsibility when you are out there representing your company.

5.                  You are actually rejecting the prospect; now that is bad for business.

6.                  You'll NEVER know what you might have gained from the prospect and from their referrals.

7.                  It’s probably worse than not having met the person in the first place.

8.                  You'll create a negative multiplier: the prospect may well tell others

9.                  Your credibility is lost

10.             If you meet again, how are you going to feel?

Destroying Your Fears

When you hesitate calling - consider:

§                       You PROMISED to call her

§                       You are simply continuing the conversation you were having last week.

§                       She is expecting your call.

§                       She has agreed to take your call.

§                       You actually met eyeball to eyeball at the exhibition

§                       You were given the distinct impression that she does have an interest in your services.

§                       You believe (I hope) that what you are offering will substantially benefit her business.

§                       You can clearly demonstrate those benefits quickly and easily.

§                       Your service or product at least matches the best there is in the marketplace

§                       You are able to support your claim with proof of other clients results and/or testimonials

§                       You spent all that time with her and you are not going to let it go to waste

§                       You believe, after you have helped solve the initial issue, there could there be an ongoing relationship leading to a substantial follow on sales

Some Final Thoughts

You don't like to hear the word no. But no is the second best answer there is. Not knowing where you stand is the worst position to be in.

What’s the worst that’s going to happen?

The very worst is she does not want your service or product. And actually says she has changed her mind. Calamity! A crisis: you have been rejected. No you have not; only the offer of your help has been rejected.

On to the next prospect!
Chris Wilkinson.                              

Certified Business Behaviour & Attitudes Analyst.               

Business Coach.

Tel: (905) 275-2907 (Mississauga).

E-mail: buspilot@bell.net

How to Set Typical Salary Ranges for Your Organization......

 When To Establish Formal Salary Ranges

 Usually you realize you need to set formal salary ranges when one of these scenarios comes along:

Scenarios Where Formal Salary Ranges Are Needed

1.An employee comes to you with a ransom job offer from down the street.

2.A hiring manager insists on paying a new hire $10,000 above the salary market rate because “they must have this individual.”

3.You have a gut feeling that the company does not have equity among your employees when it comes to compensation.

In every one of these scenarios, the need for a formal salary range is clear. Typical salary ranges are created from anchoring a midpoint to salary market data. The salary market data that you choose should reflect your compensation philosophy which will include among other things: your industry, geography and company size. Your salary market data should also be based on your company’s philosophy towards cash compensation.  Do you want to lag the salary market, lead the salary market or meet the salary market? 

Getting Market Data on Salary Ranges

Once you have established your company’s compensation philosophy, then it’s time to select a source for your salary market data. There are generally three sources of this information:

Sources of Salary Market Data

·Published, Traditional Surveys – These come from the government, associations or consulting firms and offer a broad perspective, though they may not be entirely up-to-date or match your organization’s structure, location or size.

·Internet Surveys - Since the advent of Web 2.0, there are now online resources that offer self-reported salary data from employees. These sources are very timely, easy-to-use and inexpensive options for comparison. PayScale is an example of this sort of online tool.

·Custom Surveys - Several firms are available who can custom design a survey just for your business. These types of surveys are often very accurate and rather expensive.

Ideally, you’ll want to have at least two sources to work from to guarantee the accuracy of your results.

Applying Your Formal Salary Ranges

Once you have created formal salary ranges, you want to make sure that you compare your employees’ or incumbents’ pay against the typical salary range. Most importantly, you will want to determine if you have any employees who fall below the minimum of the salary range (called green-circling) or over the maximum of the salary range (called red-circling). If you do have this situation, you’ll want to include an implementation plan for how to deal with the employees that fall outside of your typical salary range.

It may be necessary and advisable to bring any employee below the minimum of the salary range up to the range minimum, unless there are justifiable, business reasons why the person is below the minimum. Second, you may want to consider implementing a red-circle policy for freezing the salaries of those individuals who are over the top of the typical salary range, until the salary market catches up with them. Being prepared to deal with these implementation issues will be crucial in getting buy-in to create formal salary ranges.

Getting Whole Company Support of Formal Salary Ranges

Once you have a formal salary range system developed, you can ensure success by getting the proper buy-in from the company leader, and communicating effectively with employees about the reasons for creating the compensation system.  Buy-in and communication will always be key when undertaking a project of this nature.

Good luck in your efforts to create a formal salary range system.

Chris Wilkinson.                              

Certified Business Behaviour & Attitudes Analyst.               

Business Coach.

Tel: (905) 275-2907 (Mississauga).

E-mail: buspilot@bell.net

Avoid the “Lowest Price” Strategy…..

Having the lowest price isn't a strong position for anyl business. Large competitors with deep pockets and the ability to have lower operating costs will destroy any small business trying to compete on price alone. Avoiding the low pricing strategy starts with looking at the demand in the market by examining three factors:

1. Competitive Analysis: Don't just look at your competitor's pricing. Look at the whole package they offer. Are they serving price-conscious consumers or the affluent group? What are the value-added services if any?

2. Ceiling Price: The ceiling price is the highest price the market will bear. Survey experts and customers to determine pricing limits. The highest price in the market may not be the ceiling price.

3. Price Elasticity: If the demand for your product or service is less elastic, you can then have a higher ceiling on prices. Low elastic demand depends on limited competitors, buyer's perception of quality, and consumers not habituated to looking for the lowest price in your industry.

Once you understand the demand structure in your industry, review your costs and profit goals as set in your business plan or financials. The low price strategy is best avoided by small business but there are conditions such as a price war that can drag a company into the lowest price battle.

Evading a Price War

A price war can wreck havoc in any industry and leave many businesses, out of business. In the early 90's,  the competitive exercise equipment market entered a price war in a large city. Profits were plentiful but a price war took the gross margins from 42% to 12%. In less than 18 months, over 60% of the retailers were out of business while my division went national. Take these tips to evade a deadly price war:

·  Enhance Exclusivity: Products or services that are exclusive to your business provide protection from falling prices.

·  Drop High Maintenance Goods: There may be products or services in your business that have high customer service and maintenance costs. Drop the unprofitable lines and find out what customers don't want.

·  Value-added: Find value your business can add to stand out in the marketplace. Be the most unique business in the category.

·  Branding: Develop your brand name in the market. Brand name businesses can always stand strong in a price war.

Leave the price-cutting and price wars to big business. Small businesses with solid pricing strategy can escape a price war and low price position. Carefully, consider your price decisions. Your business depends on it.

Chris Wilkinson.                              

Certified Business Behaviour & Attitudes Analyst.               

Business Coach.

Tel: (905) 275-2907 (Mississauga).

E-mail: buspilot@bell.net