The Power of Price
by Paul Lawrence (03/14/2008)
When I was in college, I was desperate to find a way to make some money. And I wasn’t crazy about the idea of working at the usual part-time, minimum-wage jobs available to students. So I came up with a business plan and put it into action. One hot summer day found me trudging from door to door, passing out flyers and praying that I would get some customers from the effort.
By the time I returned home, I’d received my first inquiries. And those quickly resulted in my first customers. Within a week, I had a business that was earning more money than I needed. Within a year, that business earned over $100,000 in profits. Not bad for a college kid living at home with his mom!
That first successful start-up was a pool service. Since then, I’ve launched more than a dozen very profitable small businesses. When I analyze what made those businesses successful, I can pinpoint several reasons. But my pool service was successful because of one business strategy: price.
I got people’s attention by offering a monthly rate that was 20 percent lower than the competition. On top of that, I had an introductory "special."
Michael Masterson says that underpricing the competition may be "the most important secret a businessman can know, for it is the most powerful and most reliable way to make a small business grow." It’s also one of the best ways to enter a market and grab a share of the customer base.
When it comes to consumer merchandising, a small business can’t compete with giants like Wal-Mart. But a new service business can usually offer a better price than larger established companies providing the same service. That’s primarily because a small start-up can keep overhead low and sometimes accept a smaller profit margin. So if you can operate your small service business out of your back bedroom, without hiring a lot of employees or needing a lot of fancy equipment, you can almost certainly afford to underprice the competition.
But just because you enter the market with the lowest price in town doesn’t mean you stay there forever. For example, one of my entrepreneurial ventures later in my career was a ballroom dance instruction business. When I entered the market, I was a one-man operation, and I offered lessons at $29 when most studios charged $60. Sure, I made less money per lesson, but it was still pretty good money for me at the time. And once I had a nice little client base, I gradually inched up to the going market rate. That allowed me to hire other instructors to teach the lessons… and freed up my time to develop additional sources of income.
I already had considerable experience as a ballroom dancer - and teacher - before I decided to go into business for myself. But with the pool service business, the only "skill" I needed was the willingness to do the work. So let’s go back to that example so I can show you how well the underpricing strategy works.
Here in South Florida, where I live, the average monthly rate for pool service is about $65. In this particular industry, an account is generally worth six times the monthly gross. So an average pool account would be worth $390.
But let’s say you decided to get into the business by undercutting the competition by $15 a month. That means your average account would be worth $300. That’s a difference of just $90. Would you be willing to give up $90 a month to get a loyal, long-term customer?
And you’d only have to give up that $90 for the first six months. I can tell you from experience that if you do a good job of servicing your pool customers for six months and then raise your price by $15, at least 95 percent won’t drop you. In fact, most of them will feel that they got a bargain, because they enjoyed a very low price for a reasonable period of time. It’s not like you low-balled them and then jacked up the price right away.
And, let’s not forget that you were still making money on all those initial $50 accounts… just not as much.
Here’s how to use this strategy to start a small service business:
* Identify a service business where you see a chance to compete on price
Some of the easiest service businesses to get into are house cleaning, lawn maintenance, exterminating, and car washing. Services like these are often offered by big operations that have been in business a long time. But they tend to have big overheads, and aren’t hungry for new business, so their prices are somewhat inflated. Crunch the numbers and see if you can offer the same level of service at a better price.
* Create a marketing campaign that emphasizes the price savings
Whatever advertising medium you choose, make sure the discounted price is mentioned prominently. For the pool service business, I used flyers and direct-mail pieces. But for the ballroom dance business, I started with classified ads in newspapers and the local Yellow Pages.
A good way to emphasize the savings is to show how it adds up over time. For instance, in the pool business, I didn’t just tell prospective customers that they’d be saving $15 a month, I pointed out that they’d be saving $90 over six months.
One thing to keep in mind: Make sure your customers know they won’t be getting a lower standard of service from you. Explain that you can provide high-quality service with a lower price because, for example, you’re doing the work yourself and have practically no overhead.
* Be ready to begin operations immediately
When you launch a marketing campaign that offers a greatly discounted price, you can expect to get customers ready to do business with you in as little as a few hours. So make sure you’re prepared. Providing the promised service efficiently (and well) will assure your profitability.
[Ed. Note: Paul Lawrence is the creator of the Quick and Easy Microbusiness System, ETR’s program for starting a business for under $100. He is also the publisher of the Street Smart Business program, which has dozens of "no nonsense" tactics for the small-business entrepreneur. Check out the details here.]
This article appears courtesy of Early To Rise, the Internet’s most popular health, wealth, and success e-zine. For a complimentary subscription, visit http://www.earlytorise.com.
Monday, March 17, 2008
Thursday, January 17, 2008
Small Country Becomes First in South America to Offer GAC
“We are very delighted to be the Caribbean and South American leader in this critical and essential process of finding genuine leadership solutions for young international students who are college bound,” said Sean Taylor, principal of the AlphaMax Academy in Paramaribo, the capital city of Suriname.
GAC is ACT’s university preparation program that is taught and evaluated in English. It gives international students the skills they need to enroll in and succeed at English-speaking colleges and universities. Successful completion of the program guarantees entry into many GAC Pathway Universities in the United States, Canada, United Kingdom, Ireland, Australia, and New Zealand. The program is currently offered at 38 locations in 12 countries.
AlphaMax Academy, a private, nonsectarian international English school, offers classes in grades K-12 to nearly 70 students. Staff consists of 15 teachers, including professors from the Anton de Kom University of Suriname, where students conduct laboratory experiments in physics, chemistry, and biology.
Choosing the GAC was a long process, said Taylor. “We took our time—at least two years—seeking out and researching various programs. In the end, after research, deep thought, and reflection, we selected the GAC based on our existing relationship with ACT.”
The academy has been an ACT test center since it was established in 1998. Eleventh- and twelfth-grade students can take the ACT at every international test date. Their average score has been 24 and their top score 31 (on a scale of 1-36).
The GAC program began in October 2007 with six of the twelve students who expressed an interest in the program. Ros Washington, ACT Education Solutions curriculum manager and regional academic manager based in Australia, was at the school early last fall to train faculty and staff and assist in program implementation.
“AlphaMax Academy officials are very serious about the value of the GAC,” said Washington. “They say the GAC program is just what the Caribbean area needs because it develops not only academic skills and strategies but also, most importantly, the soft skills students need to succeed in tertiary study abroad. These are not always addressed in the normal school curriculum.”
The academy, whose motto is “in diligent pursuit of excellence,” was founded by a group of academics who saw a need for an institution that could “provide students with an education that develops their innate qualities and gives them an edge in their future pursuits.” The school is dedicated to individual attention and has an average class size of six students. It offers an “interactive academic environment to ensure quality, good student retention, and an insistence on good performance on internationally accepted, external, American examinations.”
The academic program focuses on cultivation of solid classical, foundational learning skills within the wider context of plural, multicultural, developing societies. There are concrete plans to establish other sister institutions across the region.
Since the academy’s first graduation in 2001, 80 percent of graduates have gone to college—locally and abroad. The government of Suriname has awarded scholarships to several students for study in the United States, Mexico, Venezuela, Holland, and Cuba.
Roughly the size and shape of the state of Georgia, Suriname lies on the northeast coast of South America, bordered by French Guiana in the east, Brazil in the south, and Guyana in the west. It is a multicultural and multi-religious country of 450,000 people. Though Suriname gained independence from the Netherlands in 1975, it retains a strong heritage of Dutch traditions and architecture. Given its rich ethno-cultural diversity, Suriname is often called the ‘mini united nations’ of the region. There are 20 distinct communities in Suriname – each with its own language – although Dutch remains the country’s official language.
Sunday, April 1, 2007
Teach a Man to Teach, and You’ll Feed Him for a Lifetime
"We cannot hold a torch to light another’s path without brightening our own."
Ben Sweetland
Teach a Man to Teach, and You’ll Feed Him for a Lifetime
By Paul Lawrence
Wouldn’t you like to make money doing something you love? And what if you could do that job on your own terms, with complete independence and control? Starting your own business giving private lessons is the perfect solution. I know that from experience, since I started mine about nine years ago.
You see, 10 years ago, I was training to be a ballroom dance instructor. Frankly, I’d gotten into ballroom dancing because I thought it’d be a good way to meet girls - but it turned out I had a knack for it. For close to a year, I worked as an apprentice without pay for about 40 hours a week. But the hard work and no pay seemed worthwhile because I enjoyed the teaching, I liked to dance, and I thought the job would eventually pay pretty well. (At that time, the studio got $60 an hour for a private lesson.)
Once I made it out of training, passed my teacher exams, and was deemed ready to be an instructor, I didn’t make nearly as much as I’d hoped. The studio only paid me $15 out of that 60 bucks. To make matters worse, I was only booking a few lessons a week.
It became clear to me that if I was going to make a living as a ballroom dance instructor, I needed to put out my own "shingle." But I had a problem: I didn’t have any capital to open a studio. I took a whack at seeking out some investors but, since I had no experience, I wasn’t able to find any takers.
That’s when I had a brainstorm! Maybe I could go into business without a studio. I suspected there were a lot of people out there who would like to have a teacher come to their home to give private lessons. And for those who didn’t like that idea, surely I could find some commercial space that I could rent by the hour.
Flash-forward one year to me driving home and listening to a Mariah Carey song - something about finally making it. I was really feeling those lyrics, because I’d just completed my first week of self-employment (and I was finally earning enough money to pay my bills).
If I told you it was a piece of cake to build my private-lesson business, that would be a lie. But I did build it - and with virtually no capital. It took a lot of trial and error, but I finally developed a system that worked reliably.
You’re probably not going to get rich just by operating your own private-lesson business. But if you want to be self-employed … if you want to do something you enjoy … if you want a job that gives you independence and pays decently … this type of venture is perfect for you.
Plus, working part-time at your own private-lesson business can be a steppingstone to even greater success. That’s how it worked for me. I was able to earn a modest living in a few hours each week, so I could spend time on other wealth-building activities that eventually greatly exceeded the earning power of my lesson business.
The private-lesson business is certainly not limited to ballroom dancing. You can create a business by teaching anything from martial arts to cooking to embroidery to day trading to yoga… or almost anything else you can think of. For example, my cousin used my system to build a business teaching clients how to speak Japanese. And a good friend used it to build a business teaching adults how to play the piano.
If the private-lesson business sounds like something you’d like to get into, here are the basic steps in my quick-start system:
1. Gauge the market for your business by studying the competition.
My favorite way to do that is by "shopping" them. Seek out their advertisements in your local Yellow Pages, on the Internet, and in local newspapers and shopper’s guides. Then, pretending to be a prospective client, call to find out what kind of services they offer and what they charge.
2. Devise a marketing strategy.
Get started with small, inexpensive classified ads and space ads in local newspapers. Focused mailings to your target market can also work well. And, naturally, you should have a basic website so you can get listed in search engines (like Google) that prospective clients are likely to use. As your business grows, try the Yellow Pages and other more expensive advertising vehicles.
3. Create a strong USP (Unique Selling Proposition) that will give you a competitive edge.
In my case, I had three big advantages. First, I offered the convenience of going to the client’s home for the lesson … which none of my competitors offered. Second, instead of the packages and programs being sold by my competition, I took a "one lesson at a time, pay as you go" approach that made it easy for prospective clients to book a lesson and give me a try. And, finally, without the overhead of a studio, I was able to charge about half what my competition charged. So, my USP was: "Get convenient ballroom lessons in your home at half the price charged anywhere else … without any pressure to buy expensive packages."
4. Test your marketing plan to make sure you can get enough customers.
5. Determine how you’re going to do business by figuring out where you’ll give lessons, how you’ll take payment, what credentials/licenses you’ll need, the kind of accounting system you’ll use, etc.
For quite a few years, I didn’t take credit cards - and it worked okay. But these days it’s so easy to take them with online services that I recommend giving clients that option. As for any licensing requirements, check state and local regulations to find out what (if anything) you need. Many kinds of lesson businesses don’t require a license, but some do. In Florida, there is actually a rule that dance studios have to be registered with the state (and there is an annual fee to do so).
6. Find suitable places where you can rent space by the hour when you need it.
Depending on the kind of lessons you’re giving, it might not work to do it in the client’s home. And even if it does work, as I said before, not every client is going to like the idea. I found several good spots for my ballroom dance business just by calling up studios and asking if they’d like to make some extra money with no work or hassle. If an office environment would work better for your lessons, you could try executive suites, real estate agents, etc.
This quick-start system will help you quickly and easily build a private-lesson business that can provide you with a steady income by doing something you enjoy. My ballroom dance business really changed the direction of my life - and there’s a good chance you can find similar success.
[Ed. Note: Paul Lawrence’s ballroom dance business got him started on the road to success. If you’ve been searching for something that can do the same for you, consider getting into the private-lesson business.]
This article appears courtesy of Early To Rise, the Internet’s most popular health, wealth, and success e-zine. For a complimentary subscription, visit http://www.earlytorise.com.
Ben Sweetland
Teach a Man to Teach, and You’ll Feed Him for a Lifetime
By Paul Lawrence
Wouldn’t you like to make money doing something you love? And what if you could do that job on your own terms, with complete independence and control? Starting your own business giving private lessons is the perfect solution. I know that from experience, since I started mine about nine years ago.
You see, 10 years ago, I was training to be a ballroom dance instructor. Frankly, I’d gotten into ballroom dancing because I thought it’d be a good way to meet girls - but it turned out I had a knack for it. For close to a year, I worked as an apprentice without pay for about 40 hours a week. But the hard work and no pay seemed worthwhile because I enjoyed the teaching, I liked to dance, and I thought the job would eventually pay pretty well. (At that time, the studio got $60 an hour for a private lesson.)
Once I made it out of training, passed my teacher exams, and was deemed ready to be an instructor, I didn’t make nearly as much as I’d hoped. The studio only paid me $15 out of that 60 bucks. To make matters worse, I was only booking a few lessons a week.
It became clear to me that if I was going to make a living as a ballroom dance instructor, I needed to put out my own "shingle." But I had a problem: I didn’t have any capital to open a studio. I took a whack at seeking out some investors but, since I had no experience, I wasn’t able to find any takers.
That’s when I had a brainstorm! Maybe I could go into business without a studio. I suspected there were a lot of people out there who would like to have a teacher come to their home to give private lessons. And for those who didn’t like that idea, surely I could find some commercial space that I could rent by the hour.
Flash-forward one year to me driving home and listening to a Mariah Carey song - something about finally making it. I was really feeling those lyrics, because I’d just completed my first week of self-employment (and I was finally earning enough money to pay my bills).
If I told you it was a piece of cake to build my private-lesson business, that would be a lie. But I did build it - and with virtually no capital. It took a lot of trial and error, but I finally developed a system that worked reliably.
You’re probably not going to get rich just by operating your own private-lesson business. But if you want to be self-employed … if you want to do something you enjoy … if you want a job that gives you independence and pays decently … this type of venture is perfect for you.
Plus, working part-time at your own private-lesson business can be a steppingstone to even greater success. That’s how it worked for me. I was able to earn a modest living in a few hours each week, so I could spend time on other wealth-building activities that eventually greatly exceeded the earning power of my lesson business.
The private-lesson business is certainly not limited to ballroom dancing. You can create a business by teaching anything from martial arts to cooking to embroidery to day trading to yoga… or almost anything else you can think of. For example, my cousin used my system to build a business teaching clients how to speak Japanese. And a good friend used it to build a business teaching adults how to play the piano.
If the private-lesson business sounds like something you’d like to get into, here are the basic steps in my quick-start system:
1. Gauge the market for your business by studying the competition.
My favorite way to do that is by "shopping" them. Seek out their advertisements in your local Yellow Pages, on the Internet, and in local newspapers and shopper’s guides. Then, pretending to be a prospective client, call to find out what kind of services they offer and what they charge.
2. Devise a marketing strategy.
Get started with small, inexpensive classified ads and space ads in local newspapers. Focused mailings to your target market can also work well. And, naturally, you should have a basic website so you can get listed in search engines (like Google) that prospective clients are likely to use. As your business grows, try the Yellow Pages and other more expensive advertising vehicles.
3. Create a strong USP (Unique Selling Proposition) that will give you a competitive edge.
In my case, I had three big advantages. First, I offered the convenience of going to the client’s home for the lesson … which none of my competitors offered. Second, instead of the packages and programs being sold by my competition, I took a "one lesson at a time, pay as you go" approach that made it easy for prospective clients to book a lesson and give me a try. And, finally, without the overhead of a studio, I was able to charge about half what my competition charged. So, my USP was: "Get convenient ballroom lessons in your home at half the price charged anywhere else … without any pressure to buy expensive packages."
4. Test your marketing plan to make sure you can get enough customers.
5. Determine how you’re going to do business by figuring out where you’ll give lessons, how you’ll take payment, what credentials/licenses you’ll need, the kind of accounting system you’ll use, etc.
For quite a few years, I didn’t take credit cards - and it worked okay. But these days it’s so easy to take them with online services that I recommend giving clients that option. As for any licensing requirements, check state and local regulations to find out what (if anything) you need. Many kinds of lesson businesses don’t require a license, but some do. In Florida, there is actually a rule that dance studios have to be registered with the state (and there is an annual fee to do so).
6. Find suitable places where you can rent space by the hour when you need it.
Depending on the kind of lessons you’re giving, it might not work to do it in the client’s home. And even if it does work, as I said before, not every client is going to like the idea. I found several good spots for my ballroom dance business just by calling up studios and asking if they’d like to make some extra money with no work or hassle. If an office environment would work better for your lessons, you could try executive suites, real estate agents, etc.
This quick-start system will help you quickly and easily build a private-lesson business that can provide you with a steady income by doing something you enjoy. My ballroom dance business really changed the direction of my life - and there’s a good chance you can find similar success.
[Ed. Note: Paul Lawrence’s ballroom dance business got him started on the road to success. If you’ve been searching for something that can do the same for you, consider getting into the private-lesson business.]
This article appears courtesy of Early To Rise, the Internet’s most popular health, wealth, and success e-zine. For a complimentary subscription, visit http://www.earlytorise.com.
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