wisepricer pricing wars #infographic
Small #business owners have to be very careful with their money, and often only have a limited budget to play with.
When we are having to compete in a niche with other similar businesses, it can be very tempting to run a sale through #social media and actively be seen to be undercutting our main competitors. The only problem with doing this is what happens after your campaign ends.
Yes, you may have run your sales campaign successfully, and managed to sell a lot of product or services, albeit at a much reduced price. But that’s OK, right? You managed to pick up a healthy amount of new followers, and convinced a good proportion of them to sign up to your newsletter too, maybe.
But…. there is always a ‘but’
If they are worth their salt, your competition would have picked up on your sales campaign, and may have lost some of their customers as a direct result. In retaliation, they may then go on to release their own campaign.
There is a risk that by cutting your prices too low, even if you only planned on doing this for a very short time, that you could cause a bit of a snowball effect. Each of your competitors will roll out a campaign following on from the last one, until eventually your cannot sell your product or service at a normal price again.
There is a real danger of undervaluing your product or service in your customers eyes. They will see your prices go back up and say, “hey, I can get it cheaper with them instead!” Soon enough, you will be forced to lower your price permanently, or realise that you cannot operate your business any longer on such a minimal profit level.
Ultimately, there are only losers in a price war. Be very careful about setting your sale prices. Don’t be too aggressive, or it could cost you far more than a quick profit.
Think about what your customers want
You and I share a lot in common with our clients – we are all customers in one shape or other. We all love a bargain of course, but we also appreciate good service, plus want whatever we buy to be the finest quality we can afford.
The trouble is that no one will ever find all those qualities in the same place all of the time. However, we can hit two out of three of those targets. You can build your business on a solid foundation by providing the highest quality product or service in your niche, and you can back this up with offering superb customer service.
You get what you pay for
I know that I would rather be known for offering the best quality and service in town on my social media feeds rather than be known as being the cheapest. If you sell yourself too cheap, you will not be doing yourself or your reputation any favours.
Yes, everyone loves a bargain, but do you think someone will be really happy with their purchase if it turns out to be of poor quality? Do you think they would be satisfied with a poor service?
How to handle the hagglers
If you are operating in a competitive niche, you may well attract comments on your social media pages saying something like – Your prices stink! I can get it cheaper from X.
So what do you put as a response that doesn’t involve using swear words? Well, first of all, you don’t have to justify your price to anyone. You don’t need to explain or apologise about why your product or service may cost a little more. You know what you provide is worth the money, so don’t devalue yourself or what you do with a knee-jerk reaction to reduce your price.
A polite response is always good to keep the peace, but rather than pander to the dissenter, just reply with something simple, like: “So? We offer the better package, and we prize customer satisfaction higher than the cost of the product.”
Now that the ball is back in their court, they can either choose to buy your product or service, or go with the cheaper price. If they do choose your competitor over you, then you know that they would have been a difficult sell anyway.
You have to ask yourself why they were trying to pick an argument with you if they already knew they could get what they wanted cheaper somewhere else? Maybe they had read that the other company had terrible customer service, or that they use a cheap delivery system that meant a lot of product may have arrived damaged.
Whatever the reason, you stick to your guns and take pride in your own values!
