Is Your Price “Right?”

The Price Is Right is a fun game show, but deciding the right price for your product or service is no game. Charging enough to make a profit and stay competitive in your market is a careful balancing act. You need to pay the bills without driving customers away from your business to the competition.

 

Figuring out Your Right Price boils down to three fundamentals:

 

  1. Cost – Start by identifying all of the costs associated with making your product or delivering your service. Not as easy as it sounds. The most obvious costs are usually the direct costs, like materials and labor. Rent, utilities and supplies are also easy to identify. Less obvious are costs that don’t happen all the time, like marketing and memberships. Add up all the costs to form a budget for the month or year to get a feel what it costs to deliver your product or service.

 

  1. Competition – Know your market, industry and competition to use as a benchmark, but not your only guide. Your competitors’ prices do not tell you if they are operating at a profit or anything else about the inside of the organization. Is there a lack of competition or unmet demand in your market? Competitive pricing under the right circumstances is a great opportunity to capture market share.

 

  1. Value – Identify and market the value proposition that differentiates your product or service, and use it to command a higher-than-average price in your market. Does your team have credentials, experience or knowledge that the competition doesn’t have? Do you offer a higher quality, longer lasting product? All of that can be reflected in a higher price.

 

Making sure that Your Price is Right is no game. Should you charge less to gain market share, or charge more to highlight your quality? Will you be able to cover your costs and make a profit? Feel confident that Your Price Is Right by considering the three fundamentals — cost, competition, and value.

Confused about Your Tax Filing Status?

Frequent readers know that my blog posts are often inspired by real events. A very real event right now is the 2017 Tax Filing Season Filing. Several recent conversations alerted me to the amount of confusion out there about tax filing status.

 

There are five filing statuses: Single, Married Filing Jointly, Married Filing Separately, Head of Household, and Qualifying Widow(er) with Dependent Child. Filing status is based on a person’s marital status and other circumstances.

 

Seven facts determine a taxpayer’s filing status:

 

  1. Marital status on the last day of the year determines marital status for the entire year.

 

  1. If more than one filing status applies, choose the one that results in the lower tax bill.

 

  1. Single filing status generally applies to anyone who is unmarried according to state law.

 

  1. Married couples can select from two filing status options: Married Filing Jointly or Married Filing Separately, whichever results in a lower combined tax liability. Some deductions and credits are limited using the Married Filing Separately filing status.

 

  1. Surviving spouses who do not remarry in the year of death can usually file a joint return with their spouse for that year.

 

  1. Head of Household generally applies to unmarried taxpayers who paid more than half the cost of maintaining a home that includes at least one qualifying person.

 

  1. Qualifying Widow(er) with Dependent Child can be filed if a spouse died during one of the last two tax years and there is a dependent child, plus some other circumstances.

 

This is just a glimpse of the rules determining tax filing status. Those “other circumstances” really matter. Talking to a qualified tax professional about filing options can help avoid expensive mistakes. To learn more on your own, the IRS has some pretty good tips at http://bit.ly/2ndwBqc.

 

Itemize or Standard Deduction – Which One is Better?

This time of year, there’s a lot of tax talk at home, at work, and on TV. Some of that talk centers on whether taxpayers should “itemize” or take the “standard deduction.”  Knowing the difference and which is better is important for keeping that tax bill as low as possible.

 

Taxpayers can itemize or take the standard deduction. Not both. Knowing how to choose comes down to these three points:

 

  1. Filing Status and Age

The standard deduction amount varies based on filing status and age. Amounts are indexed annually for inflation. For 2016, the standard deduction for a person who is single or married filing separately, and is under age 65 is $6,300. Single taxpayers age 65 and over get a $7,850 standard deduction. For married couples filing jointly, it’s $12,600.

 

  1. Getting the Most Tax Savings

Itemize deductions when the total exceeds the standard deduction. Itemized deductions include amounts paid during the year for state and local income or sales taxes, real estate taxes, personal property taxes, mortgage interest, gifts to charity, uninsured losses, and, depending on the situation, medical and dental expenses.

 

  1. Qualifying for the Standard Deduction

Some situations prevent taxpayers from using the standard deduction. For example, a married person filing separately from her spouse who itemizes cannot select the standard deduction, even if it’s higher than itemizing. Nonresident aliens, dual-citizen aliens, estates, trusts, and partnerships also do not qualify to take the standard deduction.

 

As usual, there’s much more to this topic than space allows here. Taxes are complicated. Consult a qualified tax professional for personalized assistance.

 

Need help choosing on your own? The IRS website has “Six Steps to Help You Choose” at: http://bit.ly/2mc4Exr