Thoughtful Thursdays – Being the lowest price can also hurt your business
This week’s Thoughtful Thursdays thought is a companion piece to last week’s post about lowering your price. It is about the consequences that may ultimately hurt your business.
Last week I mentioned that a 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.
From the point of view of your customer, the lowest price may also create a perception that the product or service being offered 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?
John Ruskin, a 19th century English poet and art critic is credited with saying:
“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.”
Have you ever purchased something based on the price and had to re-purchase a higher quality version because the first purchase did not meet your expectations? How much did the lower price save you?
What would it do to your reputation if you cut corners to save on costs that resulted in customer dissatisfaction? Doing things twice and getting paid for it once is not a good habit to get into. Your business will suffer as a result. Paraphrasing Joh Ruskin, high quality at a low price is does not make sense if you believe that you get what you pay for.
Being the lowest price is not always the best strategy. Before you approve a price reduction, consider the affect it may have on your business and the industry your business operates within
Be unique, demonstrate your value and sell it that way.
Have a question about sales? Contact Sakanashi and Associates Inc. and I will respond.
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