The Importance of Shopping Around for Different Prices
The bottom line greatly depends on your expenses; it easy to lose money if you are not watching your costs. Incremental price increases and wasted-labor hours often go unnoticed until it is too late. With continuous price shopping, you are able to keep a pulse on your expenditures while your Wasted-Labor Reports help you trim payroll and forecast schedules.
A wasted-labor report is easy to do and keep up to date. You can make one in Excel and break it down by day or week. Most POS systems like PixelPoint or Visual Touch will give the hours and wages related to a time period and calculate your fixed cost broken down to the daily amount and cost of good’s percentage from your financial statements. The excel sheet would look like an income statement but you are looking at a small portion of time, ie. each day or week. It will also have the portion of fixed costs related to that time. You can then see what days do better than others, where you are losing money and a look at your cash flow. The wage component will show you the daily or weekly cost percentage compared to sales to see if you are on track with your industry or where you are scheduling too many staff. It is also a great asset in giving insight into what to expect in the future weeks as to what sales and costs might be. This of course is a resource that may not always be a benefit, but each industry typically has a flow to it.
In everyday life it seems prices rise and on small bulk items a small increase might not get noticed at first but makes a difference on the financial reports. Competition is a great thing..... in the sense it makes sure companies are improving their products/services and offering the best fair price. A task that needs to be done is to continually be tracking prices; creating price creep reports and always looking at other company's prices and products for comparison. Again very easy to do in Excel or even create a database in Access, where you just list your items and the current supplier and price….and track away invoice by invoice! Then you can use this report to shop around and know if you are getting a good price or if a competitor is offering a better price for the same product.
A side note, payment processors might rename a few items but in the most part you can put each item charge/rate side by side to see the total picture to make your best decision. Creating an annual comparison with your past twelve processing volumes as if it was with the new processor is a more accurate way to see your annual savings.
Cost pricing is a duty that covers small items like aprons, paper towels, printer paper to business insurance, payroll and more. Some category will need to be analysis more often than others and some might not be applicable to your business at all. However, understanding why and how cost pricing will help your business and stop you from wasting money is a fundamental part in staying in business. It is not just about getting sales and money coming in, it is also about how that money goes out and gets spent.