Cutting comments

Despite the ongoing recession, small businesses should avoid the temptation to cut prices in an attempt to compete with their rivals, it has been suggested.

Matthew Perkins, an advisor at the government's Business Link service, said the cost of products and services offered should not be reduced without serious consideration. He added that while discount and special consumer offers may be the only option for some firms, this should generally be treated as a last resort since profit margins are automatically slashed.

He stated: "As a general rule what we say is to try and differentiate your service and give added value, so you can keep the prices up. Rather than cutting prices, maybe try and offer an extra service to the end client, rather than just cutting the cost of the standard service."

Some 32 per cent of business and professional service providers interviewed for the latest Confederation of British Industry report said they had cut their prices, while 23 per cent of firms offering consumer services said they had been forced into making reductions.

I think the fact that 68% of businesses haven't had to cut prices is far more telling and should be the trend for us all to follow. APA's message is, "Cut costs only after you have tried every other option."

Gareth