Protect Your Profit Margin When Selling Your Business

If you’re preparing your business for sale, or in the process of selling your business it’s vital to make sure your strategy for pricing your products and services will make sense to a buyer. Buyers are interested in the cashflow of your business and the net profits that come from selling and fulfilling your obligations to customers.

When is the last time you raised your prices? It’s not unusual that the fear of customer’s reactions will prevent a business from increasing prices, even while other costs to a business are increasing. While you might personally be willing to take the financial hit for inflation, and not raise your prices, if your operating costs are increasing your bottom-line profits will suffer.

Protecting your profit margin is essential! Buyers are comparing your business with others and businesses that have more profit are quite simply more attractive. Buyers want a high return on their investment when they buy, and low margin businesses often have less appeal.

Check your competitors’ pricing. Naturally pricing has a direct impact on your business revenue and profitability as well as your competitiveness with other businesses in your industry. Make sure you do a competitive study to see how your business’s products and services pricing compare to others.

Assess your current pricing strategy. To design the right pricing strategy for your business, you need to fully understand three dynamics: Your product, your market, and your customers. The right pricing strategy is the one that finds the balance between these three dynamics and positions your business to be the preferred solution for your target market.

Set your pricing strategy for maximum profits and continue to evaluate your strategy for pricing. The world around you changes rapidly and your bottom line is at risk if your pricing strategy fails to consider the changes taking place.

Be prepared to communicate your Pricing Strategy. Regardless of where your pricing falls: high, low or in the middle of your competitors – you will need to be able to explain your pricing strategy to interested buyers. Be prepared with facts that communicate to your buyer your business has a clear strategy for setting prices and why your pricing makes sense in the market you serve.

Determining the right pricing strategy for maximum profits is a continuous process, even while your business is for sale. The last thing you want to do is to have buyers not even look at your business because your current pricing strategy is negatively impacting your profits.