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OKVetWorks July 2024
Newsletter

As we embrace the full swing of summer, the rising temperatures bring unique challenges and opportunities for businesses across various industries. Conducting business in the heat of summer requires thoughtful planning, adaptability, and a keen focus on maintaining both productivity and employee well-being.

For many businesses, summer is a peak season, bustling with activity and increased demand. Retailers experience a surge in customer traffic, while service providers often see a rise in appointments and engagements. However, the intense heat can also pose significant hurdles, from potential health risks to operational inefficiencies. To navigate these challenges effectively, it's essential to implement strategies that keep both your business and your team thriving.

Firstly, prioritizing employee health and safety is paramount. The heat can lead to dehydration, heat exhaustion, and other heat-related illnesses, which can significantly impact productivity and morale. Ensure that your workspace is adequately cooled and that employees have access to plenty of water and breaks. Consider adjusting work hours to cooler parts of the day or offering flexible schedules to help your team stay comfortable and productive.

For businesses with outdoor operations, such as construction or farming, additional precautions are necessary. Providing shaded areas, frequent breaks, and protective gear can mitigate the risks associated with working in high temperatures. Educate your employees on the signs of heat-related illnesses and the importance of staying hydrated and taking care of themselves.

Customer experience also plays a crucial role during the summer months. Creating a comfortable and inviting environment for your customers can encourage longer visits and increased sales. If you run a retail store or a restaurant, ensure your air conditioning is functioning optimally and consider offering refreshing drinks or summer-themed promotions to attract and retain customers.

Furthermore, leveraging the season's unique opportunities can enhance your business's appeal. Summer events, festivals, and community activities provide excellent platforms for networking and promotion. Participating in or sponsoring local events can increase your visibility and foster positive community relations.

Lastly, summer is an ideal time to review and refine your business strategies. With the year halfway through, it's a good opportunity to assess your progress toward annual goals, adjust plans as needed, and prepare for the upcoming seasons. Engaging in team-building activities and strategic planning sessions can strengthen your team and align everyone with the company's objectives.

Conducting business in the heat of summer requires a balance of care, creativity, and strategic planning. By prioritizing the well-being of your employees, enhancing customer experiences, and seizing seasonal opportunities, your business can not only survive but thrive during these warmer months.

Stay cool, stay safe, and here's to a successful summer!

The History of the U.S. 4th of July 

A Celebration of Independence

Every year on July 4th, the United States comes alive with fireworks, parades, concerts, and barbecues, celebrating the nation’s independence. But what is the history behind this vibrant holiday? The story of the 4th of July is a tale of courage, determination, and the birth of a nation.

The Road to Independence

The journey to American independence began long before the Declaration of Independence was signed in 1776. Tensions had been brewing between the thirteen American colonies and the British Crown for years. Colonists were increasingly frustrated with British rule, particularly with taxation without representation and other forms of political oppression. The Stamp Act of 1765, the Townshend Acts of 1767, and the infamous Tea Act of 1773, which led to the Boston Tea Party, were significant flashpoints.

By 1774, colonial leaders convened the First Continental Congress in Philadelphia to address these grievances. However, reconciliation with Britain seemed increasingly unlikely. As hostilities escalated, the Second Continental Congress met in May 1775, following the battles of Lexington and Concord, which marked the beginning of the Revolutionary War.

Declaration of Independence

The push for independence reached its peak in 1776. On June 7, Richard Henry Lee of Virginia presented a resolution declaring the colonies' independence. After some debate and revisions, a committee of five was appointed to draft a formal declaration. This committee included Thomas Jefferson, John Adams, Benjamin Franklin, Roger Sherman, and Robert R. Livingston.

Thomas Jefferson was the principal author, and after a few weeks of drafting and revisions, the Declaration of Independence was presented to Congress. On July 2, 1776, the Continental Congress voted in favor of independence, and two days later, on July 4th, the Declaration of Independence was officially adopted.

Early Celebrations

The first celebrations of American independence were modest. On July 8, 1776, the Declaration was read aloud in Philadelphia, and crowds gathered to cheer. Festivities included bonfires, parades, and public readings. The next year, on July 4, 1777, Philadelphia marked the anniversary with an official celebration, which included fireworks, a tradition that continues to this day.

As the years passed, celebrations of Independence Day grew more elaborate. By the early 19th century, the 4th of July was widely recognized as a major holiday in the United States. Festivities included patriotic displays, music, and community events.

Institutionalizing the 4th of July

In 1870, nearly a century after the Declaration of Independence was signed, Congress passed a law making July 4th a federal holiday. The move was part of a larger effort to foster national unity and pride in the aftermath of the Civil War. The holiday was further solidified in American culture when Congress declared it a paid federal holiday in 1941.

Modern Celebrations

Today, the 4th of July is celebrated with a blend of historical reflection and joyous festivity. Parades, concerts, and fireworks are central to the holiday. Cities across the nation host large public events, and families and friends gather for barbecues and picnics. The day is also an opportunity for Americans to express their patriotism, often marked by the display of the American flag and the singing of the national anthem.

In addition to the traditional festivities, the 4th of July is a day of remembrance for those who have fought for the country’s freedom. Many communities hold ceremonies to honor veterans and active-duty military personnel, acknowledging their role in preserving the liberties declared in 1776.

The 4th of July is more than just a day of celebration; it is a reminder of the enduring values of liberty and democracy. From the signing of the Declaration of Independence to today’s grand festivities, the holiday encapsulates the spirit of a nation founded on the principles of freedom and justice. As Americans celebrate with fireworks and festivities, they also reflect on the sacrifices and struggles that have shaped the United States, ensuring that the legacy of independence endures for generations to come.

By: Daron Hoggatt

Pricing your products appropriately is crucial for the success of any business. Whether you are selling handmade crafts, electronics, or agricultural produce, understanding the distinction between wholesale and retail pricing and how to set these prices effectively can make or break your profitability. This guide aims to provide a detailed framework for determining both wholesale and retail pricing, considering various factors and strategies that can optimize your business operations.

Understanding Wholesale Pricing

Wholesale pricing is the price charged by manufacturers or distributors when selling in bulk to retailers, who then sell the products to end consumers. It is typically lower than retail pricing because it involves selling large quantities at once. Setting the right wholesale price is essential as it directly impacts your relationships with retailers and your overall business profitability.

Factors to Consider in Wholesale Pricing:

Cost of Goods Sold (COGS): This includes all the direct costs involved in producing your goods, such as materials, labor, and manufacturing overhead. Accurately calculating COGS is critical because it forms the baseline for your pricing.

Desired Profit Margin: This is the percentage of profit you aim to make over your COGS. For wholesale, a margin of 15-30% is common. However, this can vary depending on the industry and the scale of your operations.

Market Standards: Investigate what competitors are charging for similar products to ensure your prices are competitive yet profitable. Understanding market standards helps in positioning your products appropriately.

Volume Discounts: Offering discounts for larger orders can incentivize bulk purchases and help clear inventory faster. Volume discounts can also strengthen relationships with key retailers.

Logistics and Distribution Costs: Include the costs associated with shipping and handling, warehousing, and logistics management. These costs can significantly impact your wholesale pricing strategy.

Seasonal Factors: Some products have seasonal demand variations. Adjusting your wholesale prices based on these trends can optimize sales throughout the year.

Regulatory Costs: Compliance with industry regulations can add to your production costs. Ensure these are factored into your wholesale pricing.

Economic Conditions: Broader economic factors such as inflation, currency fluctuations, and market trends can influence your cost structure and pricing strategy.

Supplier Relationships: Building strong relationships with suppliers can sometimes lead to better pricing on raw materials, which in turn can help you set more competitive wholesale prices.

Formula for Wholesale Price:

Wholesale Price=COGS+(COGS×Desired Profit Margin)Wholesale Price=COGS+(COGS×Desired Profit Margin)

For example, if the COGS for a product is $10 and you want a 20% profit margin, your wholesale price would be:

Wholesale Price=10+(10×0.20)=10+2=$12Wholesale Price=10+(10×0.20)=10+2=$12

Determining Wholesale vs. Retail Pricing: 

A Comprehensive Guide

By: Daron Hoggatt

Balancing Wholesale and Retail Pricing

Consistency: Ensure that your wholesale and retail prices are consistent with industry standards to avoid under-pricing or overpricing your products. Inconsistent pricing can lead to market confusion and damage your brand’s reputation.

Transparency: Maintain transparency with your retailers regarding pricing strategies to build trust and long-term partnerships. Clear communication helps in avoiding conflicts and misunderstandings.

Flexibility: Be prepared to adjust your prices based on market demand, costs, and other economic factors. Flexible pricing strategies allow businesses to remain competitive and responsive to market changes.

Brand Value: Your pricing should reflect your brand’s value proposition. High-quality or unique products can justify higher prices. Investing in branding and marketing can enhance perceived value and support higher pricing.

Tiered Pricing: Implement tiered pricing structures for different levels of product quality or customer segments. This allows you to cater to a broader market while maximizing profitability.

Market Entry Strategy: For new products or market entries, consider introductory pricing to build market share, followed by gradual price increases.

Geographical Pricing: Adjust prices based on geographical location to account for differences in market demand and costs. This can optimize sales and profitability across regions.

Life Cycle Pricing: Modify your pricing strategy based on the product life cycle stage (introduction, growth, maturity, decline) to maximize revenue and market presence.

Value Proposition: Ensure that your pricing strategy aligns with the value proposition you offer to customers. A strong value proposition can justify higher prices and attract loyal customers.

Customer Feedback: Regularly seek feedback from customers to understand their perception of your pricing and adjust accordingly. This can help in fine-tuning your pricing strategy to better meet customer expectations.

Practical Tips for Effective Pricing

Conduct Market Research: Regularly analyze your competitors' pricing and market trends to stay competitive. Comprehensive market research provides insights into pricing strategies and consumer behavior.

Know Your Customer: Understand your target market's price sensitivity and purchasing behavior. Tailor your pricing strategy to meet the needs and expectations of your customers.

Monitor Costs: Keep a close watch on your production and operational costs to ensure they don't erode your profit margins. Regular cost audits help in maintaining profitability.

Test and Iterate: Don't be afraid to experiment with pricing strategies and gather feedback to optimize your approach. A/B testing and pilot pricing programs can provide valuable data for decision-making.

Value-Based Pricing: Consider using value-based pricing, where the price is based on the perceived value to the customer rather than solely on cost. This strategy can enhance profitability and customer satisfaction.

Bundle Pricing: Offer product bundles at a discounted rate to increase sales volume and provide better value to customers. Bundling can also help in clearing slow-moving inventory.

Psychological Pricing: Utilize psychological pricing techniques, such as pricing just below a round number (e.g., $19.99 instead of $20.00), to make prices more appealing to consumers.

Dynamic Pricing: Implement dynamic pricing strategies that adjust prices based on real-time demand and market conditions. This approach can optimize revenue and inventory management.

Customer Loyalty Programs: Offer discounts or special pricing for repeat customers to build loyalty and encourage repeat business.

Seasonal Adjustments: Adjust your pricing strategy based on seasonal demand fluctuations to maximize sales during peak periods and manage inventory during off-peak times.

Competitive Analysis: Continuously analyze competitors' pricing strategies to stay ahead in the market. This involves monitoring not just direct competitors but also substitute products and new market entrants.Profitability Analysis: Regularly review your pricing strategy to ensure it aligns with your profitability goals. Use financial metrics such as gross margin, net profit margin, and break-even analysis to assess performance.Customer Segmentation: Different customer segments may have different price sensitivities. Tailoring your pricing strategy to different segments can help maximize revenue across your customer base.Price Matching: Consider implementing price matching policies for highly competitive markets. This can help retain customers who might otherwise switch to competitors for lower prices.Technology Utilization: Leverage pricing software and analytics tools to gain deeper insights into pricing performance and optimize strategies based on data-driven decisions.

Determining wholesale and retail pricing involves a careful analysis of costs, market conditions, and business goals. By setting the right prices, you can ensure profitability, attract the right customers, and maintain a competitive edge in the market. Remember, pricing is not a one-time decision but an ongoing strategy that requires regular review and adjustment to align with changing market dynamics and business objectives. By following the comprehensive guidelines outlined in this article, businesses can develop effective pricing strategies that support sustainable growth and long-term success. Pricing should be seen as an integral part of your overall business strategy, working in harmony with marketing, sales, and operational efforts to achieve your business objectives.

Regularly revisiting and refining your pricing strategy based on feedback, performance data, and market trends is crucial. This proactive approach ensures that your pricing remains competitive and aligned with your business goals, ultimately contributing to the financial health and growth of your enterprise.

Additional Resources for Pricing Strategies:

Books:

"Priceless: The Myth of Fair Value (and How to Take Advantage of It)" by William Poundstone"The Psychology of Price: How to Use Price to Increase Demand, Profit and Customer Satisfaction" by Leigh Caldwell"Smart Pricing: How Google, Priceline, and Leading Businesses Use Pricing Innovation for Profitability" by Jagmohan Raju and Z. John Zhang

Online Courses:

Coursera: Pricing Strategy Optimization by the University of VirginiaUdemy: Pricing Strategy: Value-Based Pricing and Psychological Pricing

Consulting Services:

Engage with pricing strategy consultants who can provide tailored advice and insights based on industry best practices.

Software Tools:

Pricing optimization software such as PROS, Vendavo, and Pricefx can provide advanced analytics and insights to enhance your pricing strategies.

By leveraging these additional resources and continuously learning and adapting your pricing strategies, you can stay ahead in the competitive market and ensure the long-term success and profitability of your business.

Understanding Retail Pricing

Retail pricing is the price at which the product is sold to the end consumer. Retail prices are higher than wholesale prices as they need to cover additional costs incurred by the retailer and also provide a profit margin. Retail pricing should reflect the value perceived by the consumer while ensuring the sustainability of the business.

Factors to Consider in Retail Pricing:

Wholesale Price: The base price from which you start when determining the retail price. It should cover the cost and provide a margin for both the manufacturer and the retailer.

Operating Expenses: These include rent, utilities, salaries, marketing costs, and other overheads. Accurate calculation of these expenses ensures that all costs are covered in the retail price.

Desired Retail Profit Margin: Typically higher than wholesale, ranging from 50-100% or more, depending on the industry and product. This margin should reflect the level of service and convenience provided to the consumer.

Market Positioning: Your target market and brand positioning influence your pricing strategy. Premium brands can command higher prices, whereas value brands might focus on competitive pricing.

Consumer Demand: Understand the demand elasticity for your product. Highly elastic products require more strategic pricing to avoid significant sales fluctuations.

Competitive Landscape: Regularly monitor competitors' pricing strategies to stay competitive. This includes both direct competitors and substitute products.

Sales Channels: Different sales channels might require different pricing strategies. For example, online stores might have different pricing compared to physical retail stores due to varying overhead costs.

Psychological Pricing: Pricing strategies such as charm pricing (e.g., $19.99 instead of $20) can influence consumer perception and increase sales.

Customer Perception: The perceived value of your product plays a significant role. High-quality packaging, branding, and marketing can justify a higher retail price.

Promotional Strategies: Discounts, coupons, and seasonal sales can impact your overall pricing strategy. Ensure that these promotions are planned to maintain profitability.

Formula for Retail Price:

Retail Price=Wholesale Price+(Wholesale Price×Desired Retail Profit Margin)Retail Price=Wholesale Price+(Wholesale Price×Desired Retail Profit Margin)

For example, if your wholesale price is $12 and you aim for a 50% profit margin, your retail price would be:

Retail Price=12+(12×0.50)=12+6=$18Retail Price=12+(12×0.50)=12+6=$18

28Focus on the Product Portfolio—How to get more products and services on the shelves As entrepreneurs, we can come up with the most fantastic idea and just not make enough money from it. One of the reasons could be that we do not o er a big enough range of goods and services to generate turnover. So how do we create more and better products that can turn our good ideas into sound business ideas?Focus Area: Product PortfolioVersion 1.8.5During the  rst couple of years when we, as entrepreneurs are starting up our businesses it is very natural for us to fo-cus strictly on developing our key products and services. This probably results in some good products and services that the customers like, but our turnover is probably not as large as we hoped.One reason could be that we focus too narrowly on a few products instead of developing our total product range, thereby developing our business idea into a complete business concept. So how do we become better at working with the product portfolio as a means of getting more custom-ers and selling more to the customers we al-ready have?More products and services on the shelvesOne way is to develop and market a larger product range than we have today and to get more products on the shelves. In this way, we can attract a larger number of new and di erent customers as well as provide existing, good customers with the option of repeat purchases. For inspiration on product portfolio development see The Product Tube (see  gure), which illustrates four, di erent categories of products and services that we can o er our customers: introductory prod-ucts, core products, add-on products and  agship products.Introductory products that create  rst salesThe  rst opportunity for expanding the product portfolio is to  nd good, introductory products that can initiate the  rst sale and establish a customer relationship. Such an introductory product can be e.g. a smaller or cheaper version of our compa-ny’s core product or service, which gives the customer a taste of what our company can deliver. It could also be quite a di erent product that can inspire the customer to come back for more. Examples of introductory products could include all kinds of product samples, a free trial period, software with limited func-tionality, or a consultant review. Another option could be to give away introductory promotion products and services at events. However, by charging for our products or services, we signal to our customers, that we are o ering something of real value.“It is good salesmanship to always have a least one extra product on the shelf, to o er a satis ed customer, in order to create additional revenue.”Licensed to Daron Hoggatt, Oklahoma Department of Veterans Affairs. Downloaded July 1, 2024.

29PRODUCT PORTFOLIOSo, the advantage of selling the introductory products in-stead of giving them away is that we establish relationships with customers that might otherwise not be interested in buying our key products or services. Once the relationship has been established it is easier to extend it and to sell more products down the line.More customers through a wider product rangeAnother opportunity we have for expanding our product portfolio is by further developing our core products. The question we must ask is whether we have a one-size- ts-all product or if we have created a variety of products aimed at speci c target groups. For example, if we sold T-shirts, the question would be whether should only have S,M and L in stock or maybe even XS and XL. How about o ering our customers a range of color op-tions too? In other types of business we also have the same opportunities to o er variations of products and services, so that customers can get exactly the type they want. Products can be created is various colors, sizes or material quality. Services can vary in extent, duration, level of quality or processing. There are many possibilities, and their relevance depends en-tirely on the company’s industry and business concept. An increased product range also enables us to o er prod-ucts at di erent prices. This can help us attract customers with varying purchasing power, budgets, and interest in our products. A broad product range alone may be what attracts customers to our business. Instead of asking whether the customer wants our products, we need to focus on which products the customer wants – a good, old piece of advice from the marketplace.Add-on products for satis ed customersA third opportunity for expanding our product portfolio is through developing add-on products for customers with spe-cial needs or customers, who are so satis ed with our prod-ucts that they would like to have more of the same. Add-on products are so-called, because they are not products in their own right, but rather an added supplement when a basic product or service has been purchased. It is good salesman-ship always to have a least one extra product on the shelf, to o er a satis ed customer, in order not to miss out on addi-tional revenue. One way of doing this can be to remove a part or portion of an existing core product, if possible, and then sell it as an extra service. This can also make the core product cheaper and maybe more attractive. Another way is simply to develop new products to sell as add-ons. Examples of add-on products can be extra product components or modules that can perhaps expand core product functionality or an add-on service could be a follow up activity that improves the quality of our original delivery. The full packageThe  nal opportunity to expand our product portfolio in the Product Tube framework is through  agship products. This is most relevant when our customers are not only interested in buying an introductory product, core products, and some add-on products from us, but are also interested in buying The Product Mix: Designing the assortment of products and services © GrowthWheel International Inc. and David MadiéCOREPRODUCTSINTRODUCTORYPRODUCTSADD-ONPRODUCTSFLAGSHIPPRODUCTSPACKAGESOLUTIONSCOREADD-ONPRODUCTSFLAGSHIPPRODUCTSSOLUTIONS“Instead of thinking about whether the customer wants our product, we need to focus on which of our products the customer wants.”Licensed to Daron Hoggatt, Oklahoma Department of Veterans Affairs. Downloaded July 1, 2024.

30PRODUCT PORTFOLIOour agship products; the most advanced or luxurious prod-ucts we can oer (also called high-end products). At this point we might ask ourselves if we or whether the best product we can oer today could be developed to be even better. The most important aspect of establishing a agship product is not necessarily to sell many of them. The existence of a agship product can itself positively aect the sales of our total product range. For example, most of the BMWs driving around are not the most expensive model, but the more expensive models help to sell the cheaper ones.Another opportunity to deliver a bigger product range is through combining products in a package solution. Package solutions can involve nding complementary products that support or enhance our own products, but are developed or supplied by a business partner . The aim is to create a pack-age that is more attractive than any of the individual prod-ucts alone and that can even possibly be sold at a higher price than the total combined individual products.Emotional barriers to launching new productsDespite our ability as entrepreneurs to easily come up with ideas and concepts for new products and services, there can be a long time between the idea and actually selling the prod-uct. We can come up against emotional barriers, which make us hesitant to launch the new products we are working on. One of these barriers can be our compulsion not to launch the product until it is completely developed and perfect. Al-though striving for perfection is a noble and understandable endeavor, it can result in us investing a lot of time in ne tuning or major research to support further product devel-opment. The problem with this is that the process will lead to even more ideas for improving the product, which will further delay the launch. One way of avoiding this trap is by taking a more dynamic approach to product development, in which we need not think of the products we launch as com-plete, nal versions, but just as rst generation products that will soon be followed by updated versions.Another common emotional barrier is the fear that our new idea will be stolen by the competition. This barrier can cause us to delay launching new products for a long time, until we nally convince ourselves that the best way to stay ahead of the competition is to launch new products and stay one step ahead. In this way, we are also more likely to be rec-ognized for being innovative.Find the balanceAs we have seen, the Product Tube oers many opportuni-ties to develop our product portfolio. However, creating a product for each customer for every possible scenario is not necessarily good for our business. Sometimes it is better to focus on one single product and be really good at one thing. As Henry Ford said when he invented the assembly line, “You can have a car in any color you want, as long as it’s black.” However, it is often too few products, rather than too many, which limits our ability to truly break through with our busi-ness concept. For this reason we must attempt to develop our product portfolio.Suggestions for the next step• Decide which introductory products and services to oer new customers rst.• Consider whether you can attract new customers by developing new product variations.• Create or nd new add-ons to oer existing customers.© GrowthWheel International Inc. and David MadiéCATEGORIES OF PRODUCTS AND SERVICESDEFINITION OPPORTUNITIESINTRODUCTORY PRODUCTSSmaller versions or partial delivery of a core product, which are typically sold to rst time customers.• To make a sale to customers who otherwise would not buy• To start a customer relationship that can be extendedCORE PRODUCTSThe assortment of products and services in different variations, offered as part of the business concept.• To create product variations for various target groups• To offer products and services at various price levelsADD-ON PRODUCTSProducts and services which are a supplement to the core product and add functionality or more value for money. • To cover special needs and preferences of some clients• To create additional sales to satised customersFLAGSHIP PRODUCTSThe most comprehensive, advanced or luxurious products and solutions that are sold to the best clients.• To develop exclusive world-class products • To develop package solutions in collaboration with partnersLicensed to Daron Hoggatt, Oklahoma Department of Veterans Affairs. Downloaded July 1, 2024.

July 2024