Why Every Small Business Needs Clear Objectives of Pricing Strategy 🥧

When Woolworths slashed prices on hundreds of products—from pasta to washing powder—it made headlines. They claimed it would save families $15 a week, but investors weren’t cheering. Shares in both Woolworths and Coles dropped, raising questions about how competing objectives of pricing strategy—like boosting volume versus protecting profit—can impact business outcomes.

For small business owners, it raises a tough question: if the big players are cutting prices to stay competitive, should you do the same? That’s the real pricing dilemma—do you focus on boosting margins or lowering prices to attract more customers? The answer isn’t in the headlines. It’s in your strategy.

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Small Business Market Share-Oriented Pricing Strategy

Lowering prices to attract more customers can feel like a quick win, especially when competition ramps up or sales slow.

Emma, a café owner in Brisbane, knows the feeling. A national chain opened across the street, offering cheaper coffee and loyalty perks. In response, she dropped her coffee price by a dollar. More customers came in. Business looked strong.

But over the next few months, profits shrank. Even though sales went up, income fell. With rising milk and wage costs, the lower price point became impossible to maintain. Emma worked longer hours for less return. She eventually raised her prices—more carefully this time—but the damage to her confidence lingered.

It’s a common story. Many small businesses chase market share without considering the cost. If your margins are too slim, even a small increase in expenses can put you at risk. Unless you align your approach with clear objectives of pricing strategy—like protecting your small business profit margin—cutting prices can backfire.

Small Business Profit Margin-Oriented Pricing Objectives

Now consider Steve, who runs a small-batch soap business in South Australia. Each bar costs him $1.50 to make, and he sells it for $5. That leaves room to cover packaging, online store fees, promotions, and still make a decent profit.

Steve doesn’t compete with discount chains. He leans into what makes his business unique—natural ingredients, thoughtful packaging, and a personal touch. His customers see the value and are happy to pay more.

For many small businesses, this approach offers stability. Healthy margins fund rent, wages, and reinvestment. They give you breathing room during slow periods or rising costs. They also support key objectives of pricing strategy, like maintaining a strong small business profit margin and building long-term value.

Margin-focused pricing isn’t about charging the highest possible price. It’s about charging enough to reflect the full value of what you offer and to keep your business sustainable.

Lessons on Pricing Strategy Objectives from the Supermarket Price War

So what’s really going on with Woolworths and Coles?

Their recent price cuts aren’t just strategy—they’re damage control. Earlier this year, the ACCC revealed both supermarkets had increased margins during the cost-of-living crisis. That didn’t go over well with the public.

In response, Woolworths cut prices on everyday staples and promised stability through 2026. It’s a move to rebuild trust and nudge Coles to do the same. But make no mistake—this isn’t tied to the long-term objectives of pricing strategy. It’s about managing public perception.

And it’s not a model small businesses should try to follow. You don’t have shareholders or PR crises to manage. What you need is a clear, consistent approach that reflects your values and supports your small business profit margin, not a rushed reaction to competition.

Value-Based Pricing is the Smarter Middle Ground

This is where value-based pricing shines. Rather than basing prices on costs or competitors, it focuses on what your customers truly value—and aligns with the long-term objectives of pricing strategy.

Imagine you run a pet grooming service. Your clients aren’t just paying for the wash and trim—they’re paying for trust, gentle care, and advice they can rely on. That’s worth more than just a cheap price tag.

With value-based pricing, you set prices based on benefits, not just inputs. You might offer different packages, bundle services, or charge more for added convenience. The key is being clear in your marketing about what makes your offer valuable.

You don’t need to compete with supermarkets. You need to connect with the right customers—those who see your worth and are happy to pay for it.

Making the Right Pricing Strategy Objectives for Your Small Business

Your pricing strategy should align with your business model, your audience, and the core objectives of pricing strategy.

Ask yourself:

• What does my ideal customer care about?
• Can I rely on volume, or do I need stronger margins to stay viable?
• What are my real costs, and what buffer do I need to stay stable?

From there, experiment. Test a bundle. Try a mid-range and premium option. Ask for feedback. Pricing isn’t set-and-forget—it evolves with your business.

Stay proactive. Don’t wait until a competitor forces your hand. Know your numbers, understand your value, and price with purpose.

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Price for the Business You Want to Build

Woolworths may be making noise with price cuts, but your business plays by different rules.

You don’t need to slash prices to win trust. Instead, show value, protect your margins, and deliver something big chains simply can’t—authenticity and personal connection.

So, whether you’re aiming for stronger profits or greater reach, let your pricing reflect the objectives of pricing strategy—not panic, but purpose aligned with your business vision.

Don’t price to keep up. Price to stand out.

If you’re thinking about adjusting your prices or just want to talk it through, we’d love to help. Feel free to reach out—let’s figure it out together.

For a comprehensive view of ensuring the continuous growth of your business, Download a complimentary brochure on How To Drive Pricing Strategy To Accelerate Sales & EBIT Growth.

Are you a small or medium-sized business in need of help aligning your pricing strategy, people and operations to deliver an immediate impact on profit?

If so, please call (+61) 2 8607 7001.

You can also email us at team@valueculture.com if you have any further questions.