Thursday homework.
Don’t Go Broke . . .
Trying To Be The “Low Price King”
Serious about starting your own business?
Trust me on this:
Do not get trapped into competing on price.
Why? Because your life as a business owner will be agonizing.
• Your reign as the “Low Price King” won’t last long.
There will always be another guy fixated on dethroning you by offering even lower prices.
Then what do you do? Cut your prices (and profits) even further?
• Competing on price will suck the life out of you.
No matter what your product or service, competing primarily on low prices will leave you resenting your business, your customers, your employees, and your suppliers.
Does this sound like your dream of business ownership?
• Cash Flow and Profits will be slim.
Competing on low price will lock you into a pattern of having to settle for “low”:
Low profits. Low cash flow. Low self-esteem.
• Customer Loyalty is Temporary.
Customers or clients, who shop primarily on price, have no loyalty to any business. They are very quick to move onto the next “Low Price King”.
So, what is the answer?
Price your product\service at a price point high enough so that you can afford to provide outstanding customer service and value. And make a reasonable profit.
Of course, first you must define outstanding customer service and value for your market and product\service. Survey your ideal customers and find out what they value.
Find a way to stand out from the competition. To make a difference. To matter. To be the business that people “talk” about.
Concentrate on lowering your costs. Quit obsessing about lowering prices. Focus instead on the costs of delivering your product\service. Take a hard look at leveraging technology to reduce costs without reducing quality, dependability, or timeliness.
Pricing issues are a challenge that every business must continually deal with. There are no textbook answers; the market, the competition, the economy, and how customers perceive your product\service and prospects are all factors.