Truly, in running a business, it can be quite the ordeal to be able to set the right price tag on a product or service. And sticking to it. After a couple of market exhibits or weekend bazaars where customers walk past you in favor of the cheap trinkets in the booth just beside yours, or after you lose out on another bid as your prospect found a cheaper supplier on Craigslist, you could be tempted to slash your prices so as to compete better.
Veteran business owner will tell you that competing in price is a losing game. It’s tantamount to putting your business “at the mercy of your slowest competitor”. Why compete on price when you are more likely to succeed if you compete on value instead?
It is better to change your customers, not your pricing. Your business cannot exist without a dependable customer base that generate return customers and referrals for you. However, if would-be customers are passing you over because of price… you need new customers. Customers whose buying decisions rely solely on price is not the ideal target audience for any business. Why? Because, first, customers whose main concern is getting the lowest price don’t have the money to spend with you. How will you ever be able to sell, not to mention up-sell, to someone with no money to spend on your wares, regardless of how great it is? Secondly, price-focused customers are loyal to the lowest price and not to any particular business. Sure, you could generate short-term revenue from slashed prices, but expect very little (if at all) from the loyal customers who are of potential lifetime value to your business.
Value-over-price goals. Whatever business you are in, your value goals should always include building good customer relationships, enhanced customer experience, saving your customers’ time, providing peace of mind to your customers, and making your customers look good. Build your brand values around uniqueness and excellence. You will win plenty of loyal customers if you do.
When you sell the same physical goods as other merchants, there are two ways that you can still be competitive without having to lower your prices. First, by helping customers make the most of their every purchase. Value-adding services may include free application or free trials; how-to guides for first-time users; email announcements related to the product or service availed. If your customers like the product AND find you to be helpful as well, they will surely come back. Second, ask your existing customers what they really need and bundle items together as total solutions. If say you are selling cosmetics, consider packaging products together for the customers’ convenience — perhaps a lip color, eye pencil, and makeup remover in one on-the-go package.
Market your business on value, rather than playing the price competition game. When you compete by value, it will always be a win-win – for both your business and your customer.