Most business owners do not understand the scope of services, but it is an essential section in the proposal section. Most businesses test out services or products to see what will sell. Testing or tracking a service or product's performance is the correct way to build a product or service. If the product or service is costing you instead of generating a profit, you must let that go. Once you understand the time and costs associated with offering a service or the product, you can build a scope of services. You will understand what you can offer.
Today, many business owners do not want to look at financials, and I am not sure where this started. But most people use marketing to gauge pricing and only want to give the best price. However, you will soon notice the best price for the market or to people please will not necessarily create a profit. Marketing trends allow people to "set the value," which has caused stress on business owners and created the financial rollercoaster. The result is any business that does not earn a profit will have to close. If you work a job to keep your business going after the first five years, you have a hobby.
When researching if a product or service will work, follow the following steps:
If you determine a product or service is creating a loss, you must decide to either let it go or find ways to make it profitable without creating unfair pricing. Learn more about building out your pricing in the "Building Fair & Profitable Pricing" online business training module.
Once you determine your pricing, you will understand what you can offer in your business for the price. Build out a scope of services for each service and product to help people know what they are getting for the price. You can build out the pricing so you understand what you can offer. Pricing should not be set to make people "think" they are getting a discount but set pricing so people get what they need for the best price you can offer. If it does not fit in their "ideal plan," let them go. In business, we must learn to stop giving away products and services because that can quickly add up to business loss.
-Writter: Y. Michelle Coard, B.A.S., A.A.S In Accounting
Co-Owner of B&P Accounting Solutions, Corp.
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