Unless you operate your business solely to garner a tax write-off, you are certainly interested in generating a profit for your business. Unfortunately, many times, small businesses think that the best way to get more customers is to be cheaper than the competition. This is very dangerous for the longevity and growth of a business.
The reality is that you can never be cheaper. As soon as you lower your price, a competitor will lower their price. It is a downward spiral. In addition, as you are a small business, you obviously do not yet have the clout of those business giants in your field, who have the ability to force their suppliers to cut purchase costs. And those discount stores – if they do not already carry the same product or service as you, just wait. They will likely offer it eventually. So, trying to ‘beat’ your competitors on price alone will kill your profitability, and it is a strategy in which you will never win.
Though strategic pricing is certainly is important, it is not MOST important. Of course, your pricing should not be set arbitrarily, and it should be ‘reasonable and fair’ to your market.
So, if you are not going to focus solely on price, how can you charge a ‘reasonable and fair’ price that allows you a profit, when your competitors are cheaper? Two words…
Be Better
Pure and simple. Be better than the competition. Differentiate yourself. Give customers what the competitors cannot or will not provide. Put yourself in the customer’s shoes, and look beyond the product or service. Make your business stand-out by focusing on intangible things, such as these:
- Create a specialized niche.
- Market yourself as ‘upscale.’
- Offer personalized service.
- Go above and beyond.
- Deliver early.
- Go above and beyond.
- Be responsive.
- Become an expert. And ‘flaunt’ it.
- Add specialized packaging or include ‘trinkets.’
- Offer something for ‘free.’
- Think outside the box.
By ‘being better’ than the competition, you take pricing out of the equation. And, not only will you make your current customers happy, they will tell your future clients about you, helping to grow your business and profitability. Which is what we all want, right? 🙂
UPDATE: I just listened to an awesome SCORE webinar: What Small Business Owners Should STOP Doing to Stay Sane. Highly recommended content, related to the competing on price alone.
Until next issue…Best wishes in your endeavors!