by Victor C. Johnson · R-Jet Tek · October 1, 2005 - page(s): 43-44
Take a hard look at your overall cost of doing business. Also check the competition, if you have any.
Once you have determined exactly what goods and services you''ll be offering, it is time to set your prices, which should always accompany any sales literature you distribute.
Pricing on remanufactured cartridges may be a fairly simple and straightforward process. In general, the selling price of a remanufactured cartridge is equal to half the “street price,” or cost of a new OEM cartridge. The street price is always a discounted amount off the MSRP.
This practice is very common and actually works quite well. This pricing method is used as a sales tool by many companies: “Save 50 percent on cartridge costs.”
Fortunately, this leaves plenty of profit margin for you! Although your new and remanufactured cartridge pricing is pretty much determined by market conditions, the other goods and services you offer are wide open, and care should be taken when deciding what to charge. For example, if you are selling an item that is not readily available elsewhere, you may be able to charge a bit more for these items.
Overall, non-cartridge items that you carry in your day-to-day inventory have hidden costs that are tied to your overhead. Many times you will find the markups to be slim on these products. For this reason, don''t stock these papers, labels, etc. in large quantities. Practice the “just in time” concept of inventorying these products, and let your distributor ship them to you as you need them.
It is healthy to monitor your competition’s prices on things you both sell. While this should not be the sole consideration for your own price, it will keep you grounded in reality, and prevent you from pricing yourself out of the marketplace — or under pricing your goods and services. Avoid publishing any volume discounts you may offer to customers who are willing to purchase in quantity. If you offer these discounts, don''t lock yourself into published prices. Merely state on your price list: “Volume Discounts Available. Please Inquire.” This allows you the flexibility to set the price according to other factors and can be adjusted up or down depending on the customer.
With services you may offer, state clearly what you supply and avoid subjective statements that can be interpreted differently. When pricing these services, begin by setting an hourly rate by which you would be willing to perform this work. If you hire people to perform this work, multiply their hourly rate by at least three or four to get a retail hourly rate. If you pay a technician $10 per hour, your minimum retail service rate should be $40 per hour. The going rates for service range from $40 to $80 per hour. Finally, minimums, travel costs and delivery charges should be clearly listed on your published price lists.
Product Distribution Issues
Your pricing strategy must factor in getting your product to your customers. If you are taking the home-based business approach to your startup, this means making deliveries. The quandary you will face in many instances is how to cost effectively deliver orders often totaling less than $50 each to a large percentage of your clientele. There are many solutions available. In the early days of your startup, many of these deliveries will have to be made in support of your initial core customer base. Often, it will be painfully evident to you that this time-consuming service is actually costing you money, especially when the days’ deliveries take you to far-reaching points in your delivery area. There is no way to avoid some of these inefficient delivery practices during the period of time when you are trying to build your customer base.
When compared to the laser cartridge recharging business, the facts are quite different. With laser cartridges, many times one can affordably deliver a single cartridge to a number of customers. This is due to the higher cost of a remanufactured laser cartridge ($40 to $80) as compared to the cost of a remanufactured inkjet cartridge ($20). The solution? Condition your customers to exchange their inkjet cartridges in lots of two or three at a time. Most will understand this request and be happy to conform in order to avoid a delivery charge, which you could impose on orders “under X dollars.” If you make deliveries all day long in amounts of $50 or higher, for example, you will succeed in cost-effectively distributing your products.
Offering other consumable goods and printer-related products will also help your customers meet your minimum order requirements for free delivery. Another way to maximize your efficiency when making deliveries is to conduct sales calls to new prospects in the vicinity of your deliveries. Take advantage of where your deliveries take you by canvassing adjacent businesses for new refill customers, new sources of empties and service work. This will pay off handsomely when, the next time you deliver to that area, you are servicing four or five accounts instead of one. Consider establishing a regular delivery schedule or route. You or someone in your office can pre-call all accounts and inform them you are coming on such and such day. This allows you to ask for additional business and inform customers of any specials currently running, while giving your customers a chance to be prepared for your visit by collecting all the empties and evaluating their printer supply needs. This method of servicing your accounts will really pay off once you have built your customer base to a level that allows for a full-time employee to handle all these deliveries. Keep in mind, though, that this person is much more than a delivery person. He or she is representing your company in your absence. Motivate this person to hunt for more sales by setting up some kind of commission schedule that compensates him for seeking out new and additional business above and beyond the scheduled deliveries for any particular day.
The savvy inkjet entrepreneur finds high-density sales and maximizes deliveries by focusing marketing efforts in the field. For example, an office building with 250 companies should be the focus of its own marketing campaign and can often be handed off to a salesperson. By working the building as a group, high sales saturation can be achieved while cost-effectively servicing the delivery needs of those companies you can recruit.
This article is part of a series of excerpts from the Inkjet Guide for Entrepreneurs - A Step-by-Step Comprehensive Guide for Starting Your Own Inkjet Cartridge Remanufacturing Business, 2005 Edition, by Victor C. Johnson. Contact Johnson at (719) 578-0506 or visit www.rjettek.com.
No comments:
Post a Comment