Thoughtful Thursdays – The consequences of lowering your price
There are times when lowering your price appears to be the only way that you will get the order. One of the easiest way to get business is to sell based on price. It is also one of the riskiest, especially if you are not the supplier with the lowest costs.
Today’s sales thought is about considering the consequences of taking this action.
Let’s think about the consequences of lowering price in terms of potential benefits and costs to your business.
Potential Benefits of Lowering Price – The Good
- Receiving the order
- Increased sales volume
- Increased cash flow
- Opportunities for new business with the customer
Potential Costs of Lowering Price – The Bad
- You may not get the order
- Lower profit margins
- Missing profit expectations
- You get known for lowering prices when asked
- Your other customers ask for lower prices
- The lower price is flagged to your competitors
- The value of your product and/or service is diminished
Before taking the decision to lower price, consider the short and long term consequences this action may have on your business. Remember that the lowest price is the market.
Can your business afford to be known as the leader for low prices? Is this the brand you want for your business?
Be mindful of the reactions to your actions.
Good selling,
Richard
Have a question about sales? Contact Sakanashi and Associates Inc. and I will respond.
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