If you’re competing on price alone you’re in an extremely dangerous position.
Price is definitely an important factor in any purchasing decision (unless you’re the Sultan of Brunei!) but if you’re competing on price alone you’re in an extremely dangerous position.
No matter what product or service you offer, there will always be someone out there who can offer it cheaper – fact. If the only key benefit you can offer is a cheap price, you won’t be giving any reason for your customer to stay with you if they can find a cheaper alternative. You’ll attract customers who are only loyal to the business with the lowest price tag.
Additionally, if you’re always lowering your prices to win business, you’ll eventually run your margins so low that you’ll be in danger or putting yourself out of business!
What you want is to be in a position to charge a premium for your products or services, and attract customers who are happy to pay that premium.
By having a more sustainable competitive advantage such as a particular area of expertise or a focus on high quality, you are positioning your business to move away from bargain hunters and more towards clients that are happy to pay more for a job well done!
Here’s how to never compete on price.
Have a great understanding of who your ideal customer is
Before you spend time and money creating a service, take some time to understand who your ideal customer actually is and what they need from you. Understand their needs, desires, pain points and frustrations. You can then create a service that really meets the needs of your target audience: the person that’s willing to pay your price!
Make quality your selling point
Position yourself to your customers as an expert in your field. When discussing jobs with clients, make sure that you demonstrate that you know what you’re talking about and you can get them results. Fill your website and social media profiles with great testimonials, and make sure you can hit potential clients with all of the excellent results you’ve achieved for previous clients. Remember: best price isn’t necessarily the same as best value.
Place focus on repeat business and retained clients
Research has shown that it can be significantly more expensive to find new customers than it is to keep hold of your existing ones. Once you’ve found clients who are happy to pay good prices for your services, do everything in your power to keep them coming back for more! That means offering top quality work, excellent account management, and upselling your socks off. If you can do all of this, it will, in turn, lead to more testimonials and referrals, generating more of the customers who are willing to pay for your service.
If the only thing differentiating you from your competition is your low price point, you may find yourself in trouble. Remember, price-focused customers are only loyal to the lowest price. They might stick with you while you’re the cheapest option, but when someone cheaper comes along – and they will – not only have you taken a loss on your sales, you’ve also lost your customer base. So don’t sell yourself short – make sure the quality is there, and if your customers won’t pay your prices, find some that will!
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