Free Stuff and Selling

Everyone screams "free" while we are advised to sell for "premium prices". So, how does that work? Go back to Economics 101 and they called it "supply and demand". Talk to a ticket tout after a concert they know about supply and demand!

High Demand and Low Supply = High Prices

Low Demand and High Supply = Low Prices

But....

infinite supply means that prices head towards zero...!

If there's unlimited supply then the prices crashes (ultimately to zero).

If the product/service is in limited supply (ie it is scarce) then the price rises (if it is in demand).

Moral of the story (in a world of sweeping generalisations)...?

Don't try to sell stuff that is in unlimited supply and/or where the price of manufacture is nearly zero

eg lots of stuff on the net

eg most of what is on most people's Ipods (What would most young people pay to download the MP3 of Led Zepp 2??? I think most people swap their portable hard drives and pay zilch...)

Try to sell stuff that is in limited supply... eg tickets to see Led Zeppelin. (Name your price!)

AND while I am on the subject... you also need to ...

1) find people who have a problem that you/your product/service can sort... and...

2) who you have a way of identifying and communicating with... and...

3) have the ability/pockets/willingness to pay you to sort out their problem.

You need all three! two is not enough..

Too many people are selling stuff that is not in limited supply... or rather they commoditise what they do... try to make it look like everyone else so we end up going for the cheap option.

Rip-Off Pricing for Organic Food

"Rip-off pricing" (or do they mean 'premium pricing') is alive and well. Read Why Organic Prices are Being Covered Up in the Daily Mail (3rc March)

"Evidence of the rip-off prices supermarkets charge for organic produce is being covered up by the pro-organic lobby. The Soil Association has withdrawn publication of a study which found that the big chains charged more than twice as much as organic farm shops for some items.

"The survey, produced for the Soil Association's magazine, found that compared to farm shops, Tesco charged 63 per cent more on average for organic products, Sainsbury's 59 per cent more and Waitrose 38 per cent more. The average price of a basket of seven vegetables was £13.38, against £8.75 for farm shops - a mark-up of 53 per cent. For some items the gap was even greater. Organic beef mince was £3.85 a kilo in farm shops but £8.98 in supermarkets - 133 per cent more."

Read the whole article at Why Organic Prices are Being Covered Up in the Daily Mail...

'Beating The Credit Crunch' book - Launch Day

Today is the official launch day for the 'Beating the Credit Crunch' book.

Go to the Beating the Credit Crunch webpage to read more.

Available from Lulu.com (paperback or pdf) or direct from The Directors' Centre (where it is cheaper - £10.00 incl UK P&P on limited stocks). RRP: £20.00

Download the Introduction and Contents pages now - download

RELEVANT LINKS
the Beating the Credit Crunch webpage
Download the Introduction and Contents pages now - download

Facebook

I have just signed up to Facebook... interesting stuff.

The Facebook phenomenon is a no-brainer as a social networking tool but the jury seems to be out with respect to it as a business tool.

As usual there are the networking junkies (who have migrated through Facebook, Ecademy, LinkedIn, Plaxo etc) who will tell you that it (whatever the latest fad is) is the best thing since sliced bread.

I am going to stay with Facebook for at least a month. I have my own page (please do find 'Robert Craven' and please ask to be my 'friend'...) and so does The Directors' Centre (please do find 'The Directors' Centre' and please ask to be a 'fan'...). I will report back in a month and let you know whether it has worked for me.

Already
- I have come across five old school friends ('why didn't we maintain contact for over 30 years?')
- have touched base with five very useful business contacts (excellent)
- rekindled relationships with about another half-dozen people and
- have 'chatted' with about a dozen avid supporters who I didn't even know existed before this week.

So far so good.

Price Up!?

We always have a full-on debate at the Let's Talk events about the pros and cons of putting up (or putting down) prices. The discussion rolls over into all my work at the moment.

My view: if you can... put prices up, lose the pondlife and work less.

Michael Porter (not my favourite academic) as I have quoted before, on the subject:
“Cutting prices is usually insanity if the competition can go as low as you can”

And here's some numbers to back up my case...

- I have polled 2,000 businesses over the last six months and roughly 10% have put their prices up in the last three months.

- Not one has reported a loss in profits… the customers they lost were the pondlife, the problem clients they didn’t want in any case. They never lost their best!

Hmm… food for thought. It takes bottle to put your prices up, especially now. And what would happen if you put your prices down? As they say in the States, "Do the math!"

RELEVANT LINKS
Beating the Credit Crunch book
New Barclays Let's Talk... events: More Profit and Bright Marketing workshops

Credit Crunching discount codes...

The Credit Crunch does have a silver lining... discounts at Dell, Pizza Express and about every high street chain you can think of at vouchercodes.co.uk - too good to ignore...

RELEVANT LINKS
Beating the Credit Crunch - the book

Cash Is King

Last night's Panorama with Theo Paphitas was good. You can watch it on BBC iplayer.

His remit was as follows...

"Business dragon Theo Paphitis asks if the banks and the government are doing enough to help Britain's 4.7 million small businesses survive the recession... Are Britain's small firms are getting credit where it's due?"

Theo certainly had a good pop at the banks and the government... but there was a more important, fundamental point that needs to be re-iterated. We talk about this at just about all my events, and it is certainly featured in the new book.

Put simply, profitable businesses will go bust, and as Theo suggested, they do go bust! And the reason... CASH-FLOW is the big issue right now.

Starved of cash you cannot pay for raw materials, invest in new kit, do the R&D or pay the wages. In a world where (usually the large) customers are screwing you on your terms , the sums do not add up.

I am amazed at the following situations we have recently been told about:
- a £2m turnover manufacturing business with no cash-flow forecast
- a £1m turnover design company with no sales function or sales plan
- a £500k turnover service firm that has just been given a £2m contract but hasn't found funding to pay for the raw materials and is about to give up.


It is time to take action!

RELEVANT LINKS
Last night's Panorama
Beating the Credit Crunch - the new book