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Pricing yourself into the ground
by Janet Torley on 09/05/2016

I was prompted to write this after meeting a few business owners over the past weeks who are all working incredibly hard to stay above water.  They really are pricing  themselves into the ground. 

One thing they have all got in common is that they are offering their products or services on the premise that they should be cheaper than the competition.  Most of them are in a very competitive field where the Big Boys and the established companies play as well.  It is so easy and tempting to think that price will be the deciding factor is a customer choosing them.  That’s easy to slice a few pounds off the price and assume people will flock to your door. 

Maybe they do for the first couple of times, but the question I asked was “Do they come back time and again” or are they just perennial bargain hunters – i.e. Groupon Chasers.  Unsurprisingly, the answer was “No Janet, they don’t seem to come back”

So what to do about this: especially if you have already boxed yourself into a corner with cheap prices.

  1. The most obvious is, of course, put your prices up and why not!  Just make sure you are delivering a quality service first.  I would suggest you plan this and perhaps not double them overnight but look at sensible times of your business year to do it.
  2. Struggling to justify the increased prices – why not look at what you offer and work out what you can do to enhance the offering at very little cost to you.  This is when competitor analysis becomes an excellent tool to help you spot what you do they don’t and what you could add, they couldn’t.  It’ll mostly come down to the personal touch that you bring.
  3. Do an existing customer survey and found out what they like about your product or service and I bet most don’t mention price.  Use the results to plan an action to raise your prices.  Tell new clients why existing clients already work with you.
  4. But most importantly, STOP thinking ‘cheap’ works.  It doesn’t.  Cheap is expected not to last.  Cheap is replaceable, Cheap is not a winner.  No wonder folks didn’t come back – they moved onto the next bargain.  And by the way, these are not the sort of clients you want anyway.  No matter how cheap you went, they won’t stay, they don’t want good service and quality, they are only interested in price.

All this can be quite hard to work at and in many cases a business owner has already ground themselves into a financial quandary with cheap prices – no money for wages, let alone investment.  I can help you and usually it just takes a couple of hours to work on this with outcomes that you can use.  You just have to be prepared to make the leap from Cheap to Quality.  See here for more information