As Many Small Businesses Look for Ways to Charge Customers Less, a Few Try the Opposite Approach.
Emily Maltby, Wall Street Journal October 27, 2010
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Earlier this year, Allen Ackerman decided to charge more for his firm’s employee-placement services. The company, A-List Placement LLC, did not land some potential new customers, he says, but revenue is up 30% compared with last year.
Mr. Ackerman’s move to hike prices comes as more of his peers are doing the opposite. September marked the 22nd consecutive month in which more business owners reported cutting average selling prices than raising them, according to a survey by the National Federation of Independent Business, a trade group in Washington, D.C. Only 12% of owners said they raised prices, the survey showed.
“Owners and managers are struggling to maintain sales volume and market share,” says Ralph Zuponcic, managing partner at pricing strategy firm PricePoint Partners LLC in Hudson, Ohio. “To save that, many will drop prices,” he says. “The economy is driving that.”
The majority of small-business owners are lowering or holding firm on price points as consumers keep close tabs on their spending, according to the NFIB. The price wars will likely heat up as the holidays approach, Mr. Zuponcic says.