Thoughtful Thursdays – Consequences of being the lowest price
Not to be confused with the July 14th Thoughtful Thursdays post titled The consequences of lowering your price.
At first glance, setting the lowest price may seem to be a huge advantage and I do not necessarily disagree, but is there a downside to consider?
Today’s thought is about considering the consequences of being the lowest price. Let’s assume that we are not talking about a commodity.
The first consequence may be increased sales, which is positive. However, are those sales sustainable and profitable? If you are the lowest cost, it may be okay to be the lowest price. In my experience it is not always that simple.
Now from a purchaser’s point of view:
The lowest price may also have attached to it a perception that the product or service is of lesser quality than competitive offerings. Have you ever researched before making a purchase and not picked the lowest price? Why did you not buy the lowest price offering?
In a competitive bidding situation. Does the lowest price always get the bushiness? If not, do you ever wonder why?
Consider the “The Common Law of Business Balance”, a meditation on price attributed to John Ruskin, a 19th century English poet, fervent art critic, and socialist.
“There is hardly anything in the world that someone cannot make a little worse and sell a little cheaper, and the people who consider price alone are that person’s lawful prey. It’s unwise to pay too much, but it’s worse to pay too little. When you pay too much, you lose a little money — that is all. When you pay too little, you sometimes lose everything, because the thing you bought was incapable of doing the thing it was bought to do. The common law of business balance prohibits paying a little and getting a lot — it can’t be done. If you deal with the lowest bidder, it is well to add something for the risk you run, and if you do that you will have enough to pay for something better.”
Think like your customer and you may find that being the lowest price is not the best strategy.
Good selling,
Richard
Have a question about sales? Contact Sakanashi and Associates Inc. and I will respond.
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