Use ATO data to discover how your products & services stack-up.
Price setting seems to still be a “dark art” in most small businesses. More often than not SMEs set their price by sticking their finger in the air and testing wind speed… “What do I think people will pay?” “Will they complain if I raise my price?”… Neither of these approaches is ever a good reason to LOSE MONEY.
Apart from Clearance Sales, is every sale you make profitable? Are you REALLY sure?
It is especially important to examine the value of continuing to sell items that are making a loss for your business, and thereby lowing your overall profit.
Firstly, plug in your key business figures, next add the newly available ATO data, and this sheet will show where you sit compared to other Australian businesses in your field.
Make really powerful decisions for boosting profits. Raising the price on a few products by a few dollars will make a significant difference to your overall profit; especially if those products were previously making a loss.
BEFORE YOU START
You will need a current Profit and Loss report (Income Statement) plus be connected to the internet.
The spreadsheet also has a worked example on the second tab, to use as a reference guide.
Click here to open Price Benchmarking
NOTE: As our gift to our readers, click this blog link to directly download the excel calculator.
In the recent post 5 Profit Boosters we discussed how profit is a factor of price or cost….Really gain value from this benchmarking tool by examining how your business compares on both fronts.
Use this checker to assess individual items that you sell – is each product or service above or below industry average? and/or your business average?
RED variances indicate doing worse than your average competitor; investigate ways to increase prices and decrease costs to boost profits! Remember these are ATO averages, taken primarily from BAS, so use them as a guide, not gospel.
Slightly raise the price on your least profitable few, keep checking how the prices compare, and keep raising slightly every few months until you meet the average… If your clients won’t wear the price rises, and you make fewer sales, you may still be more profitable because ZERO profit is better than selling at a loss.
Let’s face it, we all want to be better than average and to have more Profit – keep it simple and you can start improvements today!