Thoughtful Thursdays – Sales tips for new business owners
Many of the people I help are new to running a business, their businesses are micro to small in size. Do not make the leap to think that micro and small businesses equate to small revenues.
Two years ago I wrote about the consequences of lowering your prices. Following is an updated version of that post.
There are times when lowering your price seems to be the only way that you will get the order. One of the easiest ways 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. 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 still 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
Potential Cost of Lowering Price – The Ugly
- Perhaps the greatest risk of lowering your price is sacrificing the quality of what you are delivering due to the above. Cutting corners to maintain profitability can be the beginning of the end for your business.
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.
There will always be someone who offers a lower price. It does not mean you have to play the game with them.
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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