Websites 4 Small Business Newsletter
1 April 2008

In this issue

Business Marketing Tips - Domain Name
Article - Right Price? Right Profit? 
What's Free - Google Analytics
Recommended Reading - Ladies who Launch 
Business Tools - Wordtracker
Newsletter Archives - click here

Business Marketing Tips

Domain Name

Your domain name represents one of the most important decisions you have to make in going online. The purpose of a domain name is similar to that of a street address or telephone number. The domain name directs customers to you on the Internet. The most popular domain names in Australia are “.com.au” and “.com”.

Ideally your domain name should be rich in keywords (words relating to your business) to ensure on-line success, especially with search engines.

If for example, you are a florist based in Sydney, it would be preferable for you to have one of the following domain names:

www.sydneyflorist.com.au 
www.florist.com.au 
www.sydneyflowers.com.au 

You will, however, find that generic names such as the above are already taken. In that case, register something like:

www.cindysflowers.com.au 
www.sydneyflowersandgifts.com.au 

If your business name is for example “Jim & Sons”, ensure you include a description of what you actually do, eg.

www.jimandsonscarpetcleaning.com.au  or
www.jimscarpetcleaning.com.au 


Article

Price Right?  Profit Right?

How do businesses determine their Price to customers? Some typical methods:
· Charge a bit less than or the same as competitors
· Charge a bit more than the product or service costs
· Charge as much as you need to earn to cover your costs i.e. Break-even
· Charge what you can get away with
· Charge what you think it's worth
· ‘Cost’ the product or service and calculate a mark-up to provide an acceptable profit

Let's discuss the merits and pitfalls of some of the above methods.

Follow Competitors or the Market

The problem with following competitors is that you don't always know how they calculated their price. It may be unsustainable in terms of the costs to deliver the product or service. You may win sales from them in the short term but unless you develop a better way of pricing you are likely to go out of business eventually if the price doesn't cover costs. They may have cash reserves to cover the shortfall between Costs and Price for a while and you may not. They can ‘sit it out' until you go out of business trying to compete and collect all your customers later. This may sound a bit extreme but we see it all the time in business… look at the airline industry, this is a classic strategy they have employed.

Charge a bit more than the product or service costs

The $64,000 question here is ‘How much does the product or service cost?'. If you have looked closely at Financial Reports you will have seen the term ‘COGS' which means ‘Cost of Goods Sold'. This is purely the cost of getting the product or service out of the door. COGS does not include overheads such as
administrative staff, advertising, office rent, stationery etc. You can see the danger then of charging a bit more than the product or service costs. You still have to cover the cost of Overheads and these need to be factored into the Price. The danger is that if you don't work out your ‘Break-even' situation you may be making a Gross Profit but after paying Overheads you are making a loss. Break-even analysis is the practice of calculating how much Revenue you need to cover COGS and Overheads. It is an absolute ‘must' in business to know your ‘Break-even situation'.

Charge as much as you can get away with

This is a great strategy so long as it covers your COGS and Overheads. It may work at first but if you don't keep a close eye on COGS and Overheads and they ‘creep up', it may turn out to be unprofitable in the end.

Charge what you think it's worth

Worth is an interesting concept isn't it? It can mean different things to different people. What the customer thinks it's worth may be quite different to your perception. Again, if this figure at least covers the COGS and
overheads, that's OK but most of us are in business to make a profit. You still need to keep a close eye on costs to ensure your margin is not being eroded by increased costs.

The issues relating to Price are as follows:

· Get the price right
· Know thy Costs
· Keep the price right

In order to get the price right you need to:

· Determine the cost of delivery of the product or service to customers excluding overheads.
· Know your Overheads so that you can work out your ‘Break-even' situation and how much you need to sell.
· Decide how much profit you want and calculate this into the Price.
· Know your Margin and report on it regularly to ensure it is not being eroded by increased costs.
· Know your customer satisfaction levels. Dissatisfied customers won't pay any price.
· Regularly review pricing and do small increases to cover increased costs. It is much easier to do small regular price increases than irregular large ones.

Keep the Price Right

Price increase can be a very controversial subject. Many business owners fear increasing prices because they think customers will go elsewhere. Where else would they go?

*We can show examples where a price increase combined with a small decrease in revenue may not be such a bad thing. This scenario can have a positive impact on both profit and cash-flow. It is often more difficult to increase Revenue than to increase Prices. Many customers don't even notice a small increase and
fully accept one to cover CPI rises. For many businesses failure to incorporate this into their price means they are absorbing increased costs and eroding margins.

Next time you are traveling in the Country check the prices of some ‘National Fast Food Outlets’ compared to those charged in City locations. You will see that their prices are different. It may only be a couple of cents and most people don't even notice it. This is due to higher costs in City areas such as rent and staff wages. In order to be profitable they have to account for this in the Price calculation.

* Ask for a ‘FREE' demonstration of our ‘Future Financials' service where we can prove this.

CAD partners (also known as ‘CFO On-Call’) is a team of Financial Controllers who can help business owners understand the ‘Cash-flow Cycle’ and grow business safely, by managing cash more effectively. Please call us on 1300 36 24 36 for a free copy of our booklet ‘How to control your business cash-flow… and keep some for yourself.’ www.cadpartners.biz
 

What's Free

Google Analytics

If you have a website, Google Analytics can track all of your traffic, referrals, ads, search engines, email promotions and even offline initiatives.  Once you paste the Google Analytics tracking code into each of your website pages, the tracking begins immediately.  Find out more at:

www.google.com/analytics/

Recommended Reading

Ladies Who Launch: Embracing Entrepreneurship & Creativity as a Lifestyle

If you want to pop the lid off anything you ever thought you couldn't do, shouldn't have, or couldn't achieve, this is the book for you.  All the tools you need to ignite a fire under a long-smoldering dream or catapult a lifestyle, relationship or career to a higher level are right there.  Women tend to think of dreams as bigger than themselves, pies in the sky; morsels of imagination saved for  a rainy day - in other words, out of reach.  Well, guess what? Ladies Who Launch will reprogram how you think about your dreams so that they are as real as the coffee you drink each morning.  They're real and they're all yours!  To be truly happy and inspired by the life you're living, you can take steps to wake up and launch your dreams right now.  It is time to start believing that you can have what you really want.

To order this book in Australia, click here
To order this book in USA, click here

Business Tools

Wordtracker

People use different words when they search for your products online. Use these 'keywords' in your website copy and people will find your site when they search.  No matter what business you are in, Wordtracker will tell you the words people use when they search - and how popular each word is.

With a Wordtracker subscription, you will be able to optimize your website content by using the most popular keywords for your product and services, generate thousands of relevant keywords to improve your organic and PPC search campaigns, research online markets, find niche opportunities and exploit them before your competitors. In short, your search engine ranking will soar, you'll get more visits to your website and more people will buy your products.

More info

Till next time ...

Ivana Katz
Websites 4 Small Business
www.web4business.com.au