A question came in earlier this month… “How do I compete with businesses that can offer similar products/services at a lower cost?“
The question is “Why are you depending on price to close your sales?”
It’s important to examine because *so many* people focus on it. In a weak economy, it’s natural for price pressures to be everywhere. Did you choose to compete on price, or did it sneak up on you?
If price is your edge, it should be an intentional, strategic choice. All else being equal, price will be the natural decision maker since buyer won’t have to sacrifice based on price.
The trouble is, all else is seldom equal.
In product sales, a competitor’s prices are usually lower because they sell more and can get better pricing from their suppliers. If supply costs are the issue, that’s something you can fix as your sales volume increases.
Until you get there, find some wiggle room. You may find that it makes price less important or even takes it off the table.
There’s almost always some wiggle room in a price-sensitive situation for the underdog who is hungry enough to do more (ie: provide more value) than the “low price leader”. Remember, they’re the one totally focused on price and their entire business is built around it (think “WalMart”). Want to compete with WallyWorld on price? Only if you’re crazy.
Is price *really* the only way you compete with your competition? Not in my experience.
Whether you sell products or services, there are certainly those who shop solely on price, but there are always others who want more and don’t mind paying a little more for it.
Are there no other ways that you can add value to these products and services? Have you asked your customers?
Take some time to listen to your customers. I’m confident that if you listen, you’ll find a way to take the focus off price and put it on things that will matter a week or a month from now, when price is far less important.
Let’s talk about an example, something price sensitive and seemingly generic…like carpet cleaning.
Being seldom equal
I could call a dozen carpet cleaners who will do two bedrooms and a hall for $79 (or whatever). Maybe one or two of them would do a good enough job to earn a call back, even though I suspect all of them would do a good job when it came to cleaning the carpet.
Maybe your carpet cleaning skills are only 2% better than everyone else’s, or maybe they’re a little worse (yes, you need to work on that). It matters, but it isn’t necessarily what people highly value when they get this work done.
Your job is to be their carpet cleaner. The name that comes to mind when someone mentions a dirty carpet or that they need to get theirs done.
Not because you’re the one who happened to do it yesterday, but because you’re the only one they’d dream of calling after the way you handled it last time (and the time before, and the time before). You’re the one they talk about at church, in the aisle at the grocery store, at lunch the next day, on the golf course.
Your name comes up at all of those places because you did things no one else ever has and you did things in a way that no one else ever has. The next morning, they’re still reeling from the experience.
An experience? It can be. They may live in a tiny bungalow or a 12,000 square foot mansion. Either way, you can design and deliver a consistent end-to-end experience that they just can’t forget and can’t stop telling their friends about. Ask “What else can we do?”
Rethink your pricing
Despite improving what you deliver, it’s still worth putting thought into your pricing.
Companies often price their goods based on cost, the needs of their sales people, their catalog or their e-commerce store rather than in a way that attracts customers.
Your wholesale costs can’t be ignored, but you can restructure your pricing in conjunction with increased value and change the rules of the game.