Anyone who thinks that the way to succeed in business is to be cheaper than the competition is highly likely to fail. Customers rarely buy on price alone. If they did, supermarkets would only sell their own “value” brands and never sell any premium products at all.
Yes of course there is a place in every market for being the cheapest, but unless you are an accounting expert, have a great deal of experience in marketing, or have vast cash reserves it is not a place you should ever choose to visit.
Consumers buy perceived value for money and they buy as the result of an emotional response to your marketing message or sales pitch.
If someone believes your product or service offers them value for money and your message stimulates the right emotional responses within them, they will buy.
Your prices should be based upon what it costs you to provide your goods and services plus a margin for profit. If you don’t calculate the costs carefully and fully, or you make your margin too small, then you will probably find that you are very busy, but making almost no money.
Take the time to sit down and calculate your costs thoroughly and do so as often as needed to stay up-to-date; remember, some markets have prices that fluctuate very rapidly, where others hardly change at all so make sure you are always working with the latest figures.
Another common problem in small business is that time and time again, small business owners set their prices too low out of a belief that they either they as individuals, or their products/services are somehow inferior to their competition. If this is you then you need to deal with these issues as a priority. If your products/services are inferior – find ways to improve them, period. If you lack belief in yourself, seek some confidence coaching from a life coach, business coach or similar. If you cannot resolve these issues then perhaps being in business for yourself is simply not for you.
So if you are in business for the long term and intend to make a success of what you do, then offering quality products and services at a fair price with exceptional customer service is the way forward. Yes, it will take longer to reap the rewards, but they will be sustainable rewards and you will have happy customers who go out of their way to recommend you to others.
