Believe it or not, you can increase your revenue by dropping prices. Whether or not this works for your business depends on a number of factors.

The equation

Revenue = conversion + price

This means that your revenue depends on how many you sell of one product at a certain. Price. For example, if you have cars for sale at $10,000 and sell five per week you'll make $50,000 per week.

If you're to drop the price of those cars to $9,000 you might draw in more people on a weekly basis. So although you're getting a lower price for each car, you still make more money. Even if you just get one more person in per week to buy, you'll make $54,000.

Start small

Before you start dropping the prices of you cars, start small and drop the prices of air fresheners, servicing packages and hand waxes. The price drop doesn't have to be dramatic but it does have to be noticeable.

Testing

Choose the reduction you want to test and lower the price. Advertise it to your customers and be honest with them that is a trial. (This will also create a sense of urgency that will make them more likely to buy then and there.)

Keep a close on on the figures to see if more of that particular product is being sold compared to when it was at full price.

Run your trial for a month and see if you've generated more revenue despite the drop in price.

Market research

Another way to get an idea of what price you should drop to and who would buy, would be to conduct some market research. Perhaps ask customers to fill out a very short survey when they leave and ask them about products they didn't buy. Ask the question 'what price would you pay for this product/service?'.

Find the average from those answers and, if its within your profit margin, set your new price.

Continue testing

You might think that dropping a car to $8,000 will really draw in the customers but that might not always be the case. Just dropping it to $9,000 might be enough to draw in new customers while still being well within your profit margin.

Treat each product and service differently. A strategy that works for one, might not work for another.