The experts have weighed in and said America would likely continue to experience a “mild recession” during 2023.
We understand the toll inflation and other economic turbulence can have on your business. But while your competitors might raise their prices to keep up with inflation, you might consider strategies to keep your prices at a reasonable level.
This guide will show you specifically how to increase sales during a recession while keeping your prices competitively low. And if you need further business assistance, consider how Simpay’s team can offer total business solutions to help your company stay resilient despite economic uncertainty.
Cut Overhead Costs
In 2022, small business owners reported their revenue grew by an impressive 87% — but their profits shrank by 4%. How is this possible? It’s simple. Even though they had more money coming in, they were spending more to maintain their business.
If you plan to keep your products or services at one low price, you’ll have to find ways to cut other costs to stay profitable. For example, you might renegotiate vendor contracts or insurance coverage to reduce overhead costs. Or you could consider automated tools to increase your efficiency, allowing you to do more with less.
Make Small Adjustments
Keeping prices “low” doesn’t mean you’ll never have to raise prices at all. At this point, your customer base already expects to pay more for goods and services due to inflation.
At the same time, 80% of Americans plan to adjust their spending habits if inflation persists.
How can business owners balance their price points with consumer behavior? One way is to adjust your prices slowly. Scope out the competition. Try not to exceed the percentage by which they’re increasing their prices. And always increase prices gradually so it’s not as jarring for long-term customers.
Offer Discounts and Reward Programs
Another way to keep prices low is to offer discounts and reward programs. Then, even if you have to raise prices due to inflationary pressures, your customers will still have the option to complete a purchase at a reasonable price.
Additionally, a reward program is often a great way to maintain a steady customer base and sales volume. A reward program can ensure customers return for future purchases, and you’ll also gain their contact information for email marketing campaigns and other critical touch points.
Focus on Your Must-Haves
With consumer prices rising nationwide, well over two-thirds (69%) of retail customers plan to cut back on “non-essential” expenses. In other words, the “nice-to-have” economy is fading, with Americans prioritizing their “must-have” essentials.
To thrive in this economy, you must market your products and services well, connecting your business to your customers’ needs. So how will this keep your prices low? First, by maintaining a solid sales volume, you won’t have to worry as much about increasing prices to make ends meet.
Learn How to Increase Your Sales During a Recession
Of course, maintaining low prices is only one way to stay competitive during a recession. You might also consider how raising your prices can help you compete.
Customers may simply not be interested in an item that’s lower in price (or quality). Conversely, higher prices might position your business as a high-quality alternative to your competitors’ cheaper goods.
But if you wish to keep your prices low, the above tips can help you preserve your business without eating into your profits. Doing so can empower your company to thrive, regardless of the economy.