In This Episode
In tonight’s episode we continued our discussion from last week on figuring out how much to give your employees for Christmas bonuses and we also started in on a new topic for how to set your selling price.
Since the last show we’ve pulled together a simple spreadsheet to help guide you through how to calculate the bonus pool. Click here to get the spreadsheet. Jack also addressed how to decide who gets what part of the pool in terms of a discretionary bonus. Don’t focus on being equitable, but instead focus on your feel for how well each member of your team contributed to the company’s success this year. Don’t over complicate things with formulas.
We also started to discuss how to set your selling price. Unfortunately most small business owners rely too heavily on what their competitors are charging when it comes to setting their selling price. That’s a good piece of information to have but shouldn’t be the sole criterion to setting your selling price. If it is, then you will be on a going out of business curve. Someone will always be willing to go out of business faster than you and undercut your prices as well.
We encourage our business owner clients to instead focus on the true costs of your business when looking to set their selling price. It’s one of the most strategic things you do as a business owner and can lead to great success or failure in your business. Don’t fall into the habit of always using price as the weapon to win customers. We’ll get into it in more detail next week for how to go about setting your selling price.