Posts Tagged ‘Economic Slowdown’

What Are The Best Pricing Practices For Small Business During An Economic Slowdown?

February 21st, 2012 admin

In an economic slowdown your pricing is determined by factors like input cost of production or distribution channel cost etc. ….. which are primarily working on market factors. Generally one should be working on a reactive strategy of open price …. which allows for revision in product pricing over a shorter time period instead of quarterly or yearly market driven slashes or increases.

The important consideration is to try to maintain sales, even if some of them yield marginal or no profit (i,e, break even). In other words, so long as you are covering your costs, particularly fixed costs, then there is value in doing so.

However, unless you wish to become the low-cost leader going forward, then this low pricing may create a precedent which customers expect to continue, and it also may devalue the brand.

So pricing strategy must be decided carefully, with all things considered, including unintended consequences. And it may be better to have various incentives rather than simple price cuts in order to sustain sales.

In the article “Pricing in an Inflationary_Downturn”, McKinsey recommends the following actions:

-Watch for sudden shifts in price structure
-Adjust to changing customer needs
-Monitor customer-level profitability
-Update price sensitivity research

Many companies across the nation are on the verge of closing their doors and some have already started liquidating their inventory.

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Report on the Economic Health of Small Business in Florida

April 28th, 2009 admin

Article Written By
Dr. Rick Harper, Director
University of West Florida
HAAS Center for Business Research and Economic Development

Key Ingredients for
Florida’s Economic Recovery

Small businesses are responsible for the majority of job growth
in the private sector—addressing the insurance and tax problems will allow them to grow and ensure Florida’s recovery.

It’s again a pleasure to be asked to write about the economy for the Florida Small Business Development Center Network. I only wish I were writing about the economy of several years ago rather than now.  The Bad News is that local, state and national economies are unlikely to recover rapidly from the economic crisis.  The Good News is that if we respond correctly—to windstorm insurance and property tax challenges—Florida can again lead the nation in economic growth.

Florida has been hit as hard as almost any state by an economic slowdown that progressed from sub-prime mortgages into a full-fledged recession.  We are particularly vulnerable because we were at the forefront of a lending and building boom that now looks as if it will take substantial time to unwind.  The housing boom and hurricane rebuilding stimulated economic activity and sales tax revenue poured into state coffers through 2006.  It seemed reasonable to expect that the coming wave of baby boomer retirees would choose to make their home in Florida and that our growth rate, which had long been at least double the national rate, would increase still further.  Property prices nationally rose at greater than historic average due to low interest rates, aggressive lending and, as it turns out, lax regulation, but they rose especially rapidly in Florida.

The national bubble burst and left us with several problems.  The breakdown of incentives that traditionally brought population growth and economic opportunity to the State is one.

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