Day
12 - Resist the temptation to under price and discount
Young
companies tend to make a consistent and dangerous mistake
in starting their companies. They price their goods and services
under market value or feel they must "run a sale"
to get business in the door.
When
we get started we tend to have some confidence issues. That
is completely normal. So if that's you, don't beat yourself
up. It's life. If we are unsure of ourselves, we often try
to win business on price.
There's
an old salesman adage that says "win on price, die on
price." In other words, the business you get because
you are the cheapest will only be there as long as no one
else is less expensive. Being the lowest cost provider is
a risky position to try to own - especially if you are a small
to medium sized company.
So
what can you do as an alternative?
Focus
on creating more value for your customers, but keeping your
prices in tact. We often suggest that a "free with purchase"
offer is more motivating to customers that the typical "15%
off" special.
If
you are like most, you will be tempted to decrease your prices
in hopes of achieving business. If you find yourself relying
on this approach, try to catch yourself - at least some of
the time - and see if there are not alternate strategies.
You will find there are, that customers will pay more if they
perceive greater value, and that resisting the temptation
to discount will add to the profitability and long-term health
of your company.
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