In a soft economy, you will find that customers are less likely to part with their hard-earned dollars. For small businesses, this can mean a decrease in profits that could put you in serious jeopardy. One way to combat this is to cut your prices. Keep in mind that cutting your prices does not always equal cutting your profits. Here are a few scenarios where you can cut costs and see big rewards. Increase your sales numbers Will cutting prices allow you to sell more of your product or services, ultimately raising your bottom line? Calculate the anticipated rise in volume versus the discounted rate to determine if your bottom line will enjoy growth. After all, in economics, the supply/demand graph indicates that a lower price will sell more widgets. The “economy” option Another way to cut prices without affecting your profits is to create an “economy” version of your product. This is a product with fewer frills and is offered at the same time you offer the original version. This gives your customers a more affordable option without diluting your main product, and it may keep your budget-conscious customers from shopping elsewhere. Those who are loyal to your original product can still enjoy it at the normal costs, but those who are looking for a better value can cut a few frills and go with the second option. Create a package deal If you offer multiple products or services, considering offering them up as a bundle package with a percentage off what it would cost to buy each item individually. You’ll see magazines doing this frequently; they’ll offer an annual subscription for 30% off the individual issue price. Customers who are interested in the value of an item will often choose the package deal, and you may end up selling them products or services that you normally would not have if they were buying everything individually. Cut your costs Another thing to consider if you want to drop your selling price is to look for ways to cut your production costs. In some cases, it may be easier to cut money from other aspects of the business than from the product itself. For example, take a look at your marketing. Will a black and white ad bring in as many customers at the full color one? Could you go with a two-color brochure instead of four-color? Do you have the photography skills to take your own images instead of hiring a photographer? By looking at ways to cut your business’ costs, you can make sure that you can safely cut your prices without cutting your profit margin. With an ounce of creativity and a dash of economic understanding, you can grow your profits, regardless of the economy outside.