In this episode of the Enlightened Entrepreneur, I share my answer a timely question from my recent Financial Freedom Bootcamp: how can small business owners stay competitive amidst tariff changes, without resorting to drastic price cuts?
Listen in to learn what tariffs really are, how they impact your pricing & cost structure and what steps to take to protect your profits.
💡 What You’ll Learn
- What a tariff is (and why thinking of it like a “duty” helps)
- Why competing solely on price can harm your business
- How to review your cost structure and pricing strategy effectively
- Ways to enhance perceived value instead of discounting
- Smart strategies to stay competitive without sacrificing profit margins
🔗 Resources & Links
- If your pricing could use a review, be sure to grab my easy to use Product & Services Pricing Calculator today!
Thank you for listening!
💬 Connect with Leandra
● Follow me on Instagram: @leandracreates
● Visit my website: www.stingrayadvisorygroup.com
Please note that I may have affiliate relationships. Rest assured, this does not influence any of my recommendations or opinions; I only recommend tools and resources I actually use and value.
Episode Transcript
A few times a year, my team and I host our Financial
Freedom Bootcamp, which is avirtual training that takes
place for about an hour a dayover the course of three days.
And in this bootcamp, we areconnecting with small business
owners and aspiringentrepreneurs to help them
really make money managementapproachable and actionable.
(00:23):
Really taking out a lot of thejargon and thinking about how
you can decode your numbers, howyou know what data points you
should be looking at in yourbusiness, and how you can use
that information to make fullyinformed data-driven decisions
instead of relying on your gutor your instinct.
So when we hosted this sessionrecently, after each one, we
(00:44):
offer a q and a session for ourparticipants.
And one of the questions thatcame up, which is certainly
timely and relevant, was how amI able to stay competitive with
the tariffs that are beingimposed and really stay present
with my clients?
(01:04):
Not need to give everything awayand just discount all of my
prices.
And so while the tariffconversation continues to move
about, is it happening, is itnot?
Is it going to stick?
Where is all of this going toland?
I did still think that this wascertainly relevant to bring to
our listeners here, and so Iwanted to talk a little bit
(01:25):
about.
Tariffs and how you can thinkabout them as something that may
be impactful to your business.
So first, what is a tariff?
It feels like it's somethingthat's a little bit gray and
nebulous.
I talk to business owners andsome of them aren't even really
clear on what this is.
So in the simplest term, whatimmediately comes to mind for
me, whenever I think about atariff is a duty.
(01:48):
And you might say why is that?
Basically think of a duty, Ithink.
It comes to mind for me becauseit's more approachable and
relatable.
It's something that a lot morepeople are accustomed to hearing
that word versus a tariff.
And so if you think about it inthat context, what is a duty is
basically a tax that's beingimposed on a good that's coming
into the country.
(02:10):
So as a consumer, it's somethingthat you most likely have
encountered, especially if youdo a lot of traveling.
So in the simplest terms, thinkabout, I don't know if maybe
you've been traveling a lotrecently or over the last
several years, if that's been onhold or how things are working
for you.
But the last time that youtraveled, particularly in an
airport, if you were goingthrough the airport and you came
(02:31):
across a duty free shop.
That meant it was an opportunityfor you to go in and purchase
goods before they were going tobe taxed or without a tax.
And so in a very simple analogy,that is what you wanna be
thinking about when it comes tothe tariffs.
Tariffs are taxes that are beingimposed on goods entering the
(02:53):
country.
Typically.
It's something that's used tostimulate, revenue or income,
but.
As the business owner it is anadditional tax on the, good that
you're bringing in.
So if you're purchasingmaterials or a finished product,
something that you're going tobe selling to your end customer
or using within your production,then yes, there's going to be an
(03:14):
additional cost for that.
So thinking about that from theconsumer standpoint and the fact
that a tariff is a duty.
It is a tax that's being imposedon something.
You would wanna be verycognizant of that as you're
thinking about what your supplychain looks like.
And so in response to theindividual who asked this during
(03:35):
our bootcamp and his questionbeing, do I just need to slash
my prices so that I can staycompetitive?
My answer to him was, you maynot like this answer, but the
answer is no.
Being competitive solely onprice.
Is not generally the bestsolution any at any time.
So looking at your competitor'sprices and saying I'm just going
to be lower than them becausethen that will allow me to
(03:57):
attract more customers orclients is generally
counterproductive.
One, you have no idea what yourcompetitors cost of goods are.
What are their overhead costs?
Do they own their building orare they renting?
Do they have a lot of.
Salary and wages, what are theother expenses that go into this
and into running and operatingtheir business.
(04:17):
So it's not necessarily anapples to apples comparison for
them to be able to break even ata certain price point.
Doesn't mean that you can aswell.
And obviously our goal as abusiness owner is not just to
break even, it's to beprofitable.
So you also need to be fullyaware of what your costs are
that go into getting yourproduct or service out the door
to make sure that when you aresetting your pricing, it is set
(04:40):
at a.
A place that allows you toactually be profitable.
So instead of thinking solely ofimmediately slashing prices to
be competitive, especially in aneconomic climate and condition
as we are currently in, I wouldencourage you to be thinking
about reviewing your existingpricing, and your costs.
Are there any opportunities toreduce the cost that you're
(05:02):
seeing?
So for example, if you are in aposition and your cashflow
supports it, if you're buyingmaterials right now.
Can you talk to your vendor orsupplier to see about purchasing
in bulk for a discount?
Are you able to see about havingpayment terms so you maybe are
able to get a discount on thepayments that you're making on
the purchases that you werealready procuring?
(05:25):
Are there other things that areeither redundant or unnecessary
in your.
Production.
Are there ways to optimize yourproduction to be more efficient,
in essence, to cut cost andcontrol things on your end that
way as well.
So really it is a goodopportunity to go back and slow
down and assess, is my pricingactually adequate?
(05:47):
Are there any things that I cando to modify within my current
pricing model?
And also thinking about what isyour competitive advantage?
So are there things that youoffer that your competitors do
not, that maybe you're nothighlighting in your marketing?
Are there.
Other things that maybe are avalue add that you can combine
with your services.
So for example maybe you offer aservice and right now you're not
(06:10):
offering any type of warranty orfollow up or even a product.
Is there an opportunity to addsome type of guarantee or
warranty or something that willallow your clients to be more
confident and secure in thepurchases that they're making
And it's not going to have.
Too much additional cost for youto provide that additional level
(06:31):
of support and engagement.
So those are some of the thingsthat I would encourage you to
think about.
So for today's ActionAccelerator, what I want you to
do to help put this into play inyour business right now is to
think about your competitiveadvantage.
What are some of the things thatset you apart from your
competitors?
And see, are you highlightingthose things right now?
(06:52):
Because that may be a lowhanging fruit opportunity.
Instead of thinking about I needto be competitive solely on
price.
Think about how you can becompetitive on value.
And so that's what I want toencourage you to think about
today.
Additionally, if you do have anyquestions and are getting a
little bit hung up on yourpricing in general, I will
(07:12):
include a link in today's shownotes about a resource that my
team and I have created, whichis a pricing calculator.
And I love this tool.
It is an easy, approachableresource to allow you to
actually put in your existingpricing to play around with
different scenarios so that youcan see what if we offer a
discount factor in things liketaxes that you're.
(07:32):
Sales tax that needs to becollected if we wanna run a
promotion or a sales offer, etcetera, and look at various
scenarios so that it's veryclear from a visual perspective
everything that's going intoproducing your good or service,
and then allowing you toactually play around with those
numbers to make sure that yourbusiness is set up.
For success and long-termprofitability.
(07:54):
So with that, thank you so muchfor joining me.
I encourage you to continue tostay informed, be enlightened,
and be empowered.
I look forward to connectingwith you on our next episode of
The Enlightened Entrepreneur.
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