Business Advisory Series: Saving Your Business – Setting the Right Price

A Business Recovery Perspective by OakTree Accounting & Corporate Solutions, Singapore

Saving your business through Business Advisory

There is a familiar storyline playing out across Singapore — beloved cafés shutting their doors, once-bustling retail shops thinning out, long-standing F&B names disappearing, and many newly launched ventures quietly fading away.

As reported by Channel NewsAsia recently, more than 3,000 F&B outlets shuttered their doors in 2024 alone. Interestingly, despite such a negative outlook, it seems that there are more openings than closures in 2025. Retail businesses have not been spared either, with competition from e-commerce, international sales, and a robust logistics system delivering a fatal blow to many storefront retail businesses.

The economic landscape has shifted, and the pressures are real. Rental, manpower, and cost of goods — the “three mountains” — continue to weigh heavily on SMEs. Yet beneath these visible burdens lies another silent cause of business decline: incorrect pricing.

Many business owners assume pricing is a simple calculation — cost plus margin. But in reality, pricing is a strategic mechanism that determines survival, competitiveness, brand positioning, customer perception, and long-term financial feasibility. It is the heartbeat of a business, and we agree with you: it is always easier said than done. When pricing is off, even by a small degree, losses accumulate, cash flow tightens, and sustainability weakens. This often leads to tragic endings such as unstable profits, cash flow problems, and ultimately closure. As we are writing this article, news has emerged of a chain massage parlour closing abruptly, leaving consumers who had purchased prepaid packages in a state of shock. While we do not speculate on the reason behind the closure, one thing is for sure: businesses do not cease operations overnight.

At OakTree Accounting & Corporate Solutions, we have seen countless businesses in distress — not because the product was bad, not because demand didn’t exist, but because pricing decisions were made without data, without modelling, and without an understanding of the multiple factors that ensure correct pricing decisions. And this article speaks directly to business owners who feel their situation slipping… yet still believe their business deserves a chance to recover.

Why Many Failing Businesses Need Advisory, Not Just Compliance Accounting

Most SMEs engage accountants only for compliance — filing taxes, preparing accounts, meeting statutory obligations. But is that really the true meaning of accounting?

As a team of accountants with decades of experience in different fields, we often struggle to convince businesses that accounting is more than just a “back-end” function.

For large MNCs, they have every reason to classify accountants as a back-end function. They have professional data analysts to interpret financial data, they have sales offices that provide timely feedback on how demand changes when price fluctuates, and they have dedicated marketing teams that perform A/B testing to ensure the most profitable segments continue to outshine competitors.

For SMEs, your accountants will be your data analysts. Sometimes, they will be your sales office too, especially when sales figures tell a tale. They could also be the ones to evaluate which product is the most profitable for your next marketing campaign.

Accounting for SMEs is far from compliance. What SMEs truly need are proficient advisors who can extract meaning from financial numbers, interpret patterns, identify commercial blind spots, and reshape strategy from the inside out.

Financial statements are not merely records of the past — they are diagnostic maps of what must change. They reveal:

·       Pricing misalignment

·       Cost structure inefficiencies

·       Revenue leakages

·       Demand concentration risks

·       Margin erosion

·       Product cannibalisation

·       Underperforming customer segments

Yet many business owners never use this information to guide decisions. They rely on instinct, emotion, habit, or “what competitors are charging.” Most also assume that accounting is just a compliance cost. For better cost savings, opting for yearly accounting at the expense of timely information may be the preferred choice for business owners who believe that accounting is solely for compliance. This is not true.

Turning Decline Around Through Data, Pricing Strategy and Grounded Advisory

If your business is just starting out, or is facing persistent hurdles, always turn to your numbers.

A turnaround begins with clarity — and clarity comes from financial interpretation. We analyse revenue composition, gross margins, contribution margins, breakeven thresholds, product-tier profitability, and purchasing behaviour cycles. From there, we build pricing models that reflect real-world feasibility — not theoretical spreadsheets. The above may seem like a series of bombastic phrases out of an Accounting 101 module. However, these terminologies exist for a reason, and each offers a distinct meaning of its own.

And what makes OakTree different is the practicality of our recommendations. We are advisors who are not detached, academic-based, or overly corporate (MNC setups). We are advisors who live in the same consumer world as your customers. We understand why a $5 latte struggles in a neighbourhood estate, yet a $14 one thrives in a lifestyle enclave. We have seen how a bold 10% price increase in a hair salon can shift customer retention — not because clients cannot afford it, but because perception and alternatives exist within steps.

Example 1: A Neighbourhood Hair Salon Losing Customers

A salon approached us believing their rental was the problem. But after studying transaction data, customer visit intervals, and pricing tiers of nearby competitors, we discovered that their entry-level haircut price positioned them awkwardly — not cheap enough to attract budget-driven customers, not premium enough to justify experience nor create a premium perception. By restructuring service bundles, repositioning price anchors, and identifying a profitable customer segment, revenue stabilised and slowly grew — without renovation, rebranding, or staff overhaul. They took just 4 months to see green.

Why OakTree Understands SMEs Better Than Traditional Advisors – “Knowing you”

Unlike large consulting firms who analyse businesses from skyscrapers and luxury boardrooms, OakTree advisors live in the same heartland reality as the SMEs we support. We eat hawker Hokkien mee, queue for bubble tea, follow local influencers, and scroll through the same IG and Facebook feeds that shape consumer trends. We get our hair treatment done in neighbourhood shops (not necessarily the premium outlets along Orchard), buy hardware tools from 五金店, shop at heartland markets, café-hop across estates — sometimes across the Causeway too — and understand how MRT proximity can make or break foot traffic.

We understand SMEs because we live among them, as your customers, neighbours, and fellow Singaporeans. This grounded perspective allows us to interpret financial data not just mathematically — but contextually, culturally, and commercially. This gives us that unique competitive edge — knowing you. An advisor who doesn't know you will never be able to help you.

Establishing True Cost — The Foundation Often Misunderstood

One reason failing businesses hesitate to hire advisors is because they believe they already understand their costs. But most do not. They overlook:

·       Absorbed overhead

·       Shrinkage and wastage

·       Staff inefficiency

·       Hidden cost layering

·       Supplier dependency risks

·       Depreciation & capital outlays

You cannot set the right price if you do not truly know your cost. And once again, our relatability matters — because we have seen how a bakery loses margin not due to flour prices, but due to labour shortages and equipment outlays. We know how a hardware shop’s margins fluctuate based on housing estate demographics. We have seen how an F&B store fails due to the wide range of menu items, leading to poor economies of scale.

Example 2: A Small Dessert Café Struggling With Losses

The owner believed the problem was low sales. But after reviewing actual ingredient yield, portion variance, menu mix ratios, and consumer flow (peak & off-peak), we found the real issue — the best-selling item had the lowest margin. It is one of the textbook case of pricing your products incorrectly.

One may argue that that could be a technique itself (薄利多销), but as a matter of fact, the small setup only fulfilled the “薄利” but could not achieve the “多销” level to justify the margins.

By adjusting recipe cost allocation and repositioning menu prices, profitability emerged without sacrificing sales quantity. Their signature dessert offers way more value then the owner original perceived and hence, they failed to set the correct pricce initially.

Understanding Demand Beyond Assumptions – Quantity vs Price

Demand often shares a close relationship with price points. Having the right pricing strategy always allows you to maximise profit margins and bottom line. However, demand is not straightforward. Demand changes based on:

·       Location context

·       Disposable income band

·       Cultural preferences

·       Digital influence

·       Social proof

·       Convenience trade-offs

Because we participate in the same consumption ecosystem, we see shifting behaviours before they appear in financial numbers. That perspective allows us to advise with empathy and relevance — not theory.

The ultimate analysis falls on Quantity vs Price. Basic economics suggests an increase in price may result in reduced quantity while a decrease in price could bring about an increase in demand. The balance between quantity and price point is the essence of price setting, otherwise commonly known as having a pricing strategy. However, understanding this is not as simple as it seems.

Marketing and Advertising Must Align With Pricing Reality

Many SMEs make the mistake of spending on marketing before fixing pricing. This is how losses accelerate. Marketing amplifies what already exists — if your pricing strategy is wrong, it amplifies loss instead of boosting profit margins. Our advisory ensures that marketing, pricing, branding, and demand dynamics reinforce one another — not conflict.

Example 3: A Retail Boutique With Falling Sales

Instead of discounting to increase traffic, we analysed purchasing triggers, bundling potential, and perceived value cues. By modifying product placement and adjusting pricing psychology, sales volume improved significantly with minimal advertising expenditure. Yes, marketing is defintely something that will be required to drive businesses but setting the price correctly allows you to maximise marketing's ROI.

Pricing It Right — Through Sensitivity Analysis and Monitoring

Pricing is not a one-time decision, neither is it one-size-fits-all. Pricing strategy needs to be implemented after considering many factors and characteristics of the business. Whether it is cost-plus pricing, value-based pricing, temporary penetration pricing, or dynamic pricing, all have their merits and downsides. Each may be applicable for different businesses under different circumstances. For small businesses, having the correct pricing model is always essential; however, this requires analysis of not just the business but also the target market (market conditions, market research, external factors). At OakTree, we believe this is a process of ongoing calibration. We analyse and assist companies to document:

·       How small price changes affect quantity through A/B testing

·       Establishing break-even points, required sales volumes, and monitoring of profit margins

·       Establishing the true costs of your business (fixed costs, variable costs, cost of goods sold, operating costs). For factory setups, this will include direct labour costs, materials, factory overhead, salaries and benefits, and other production costs.

·       Customers’ perceived value, customer loyalty, and where resistance begins

·       General evaluation of market conditions, target market, and market segment

This is how recovery becomes sustainable rather than short-lived. Pricing has multiple aspects for certain businesses. A bakery with seasonal food items is very different from a laundry shop. A café in Hougang and one located at Dempsey are going to be very different as well.

Collection of Data Through Accounting — and the Loop Back

With such versatility affecting price, we need solid and dependable numbers to work with. Having trusted figures also facilitates model testing and performance evaluation, and this is done through proper accounting. Most clients engage our advisory service alongside with monthly accounting engagement. Some clients prefer having engages us on a fractional CFO basis and to consistently assist them with pricing decisions.

Whether it is a one-off advisory project or a constant fractional CFO service, data is essential. It is the compass that guides decisions. With accurate data, we revisit the cycle of pricing decisions:

1.     Understanding your business

2.     Interpreting and analysing financial data & past performance

3.     Implementation and adjustments

4.     Monitoring and documenting results

5.     Reviewing, refining and comparing

6.     Increased understanding of your business

7.     Making more informed interpretations and analysis of the financial data collected

And through this loop, businesses regain control — steadily, rationally, confidently.

A Message of Solidarity and Hope

We do not promise miracles, and we do not pretend every business can be saved. But we believe many more businesses can survive — and some can even thrive — when decisions are guided by numbers, grounded understanding, and advisors who genuinely know the market, the culture, and the lived realities of Singapore SMEs.

OakTree stands with business owners who are fighting to stay afloat, who are tired but not defeated, who simply need clarity, structure, and a path forward. We walk this journey beside you — not above you — and we offer not just technical expertise, but companionship in rebuilding. As accountants, we hope to offer greater clarity to businesses in price setting and contribute actively to product pricing decisions. While there may be many external factors affecting customers’ preferences, we believe our expertise can inject growth opportunities for small businesses.

If your business is struggling, you do not have to face it alone. Speak to our business advisors and find out how we are able to help you. Business advisory could be the answer to saving your business.

DISCLAIMER: The views and opinions expressed in this article are those of the author and do not necessarily represent the views and opinions of any individuals or organizations with which the author may be affiliated, either in a professional or personal capacity, unless explicitly stated.