The Case Against Lower Prices -
In times of increased competition in a finite market, particularly when spending has been reduced, the question of how to increase sales arises. Economics and marketing provide us with many theories and strategies on how to make money – it is after all the basis of both areas of study.
There are different pricing models at odds here. One will tell you to offer the lowest price within your margins. This can result in higher short-term sales. That is, until your competition offers a lower price. What happens long-term with lowering prices? Does quality of the product/service lower as well? How about Customer Service and back end processes? If you eventually make only enough to just get by what parts of your business are you willing to sacrifice? Not to mention what happens when the economy stabilizes, how will your customers react when you start to increase your prices?
Another model will tell you to maintain your pricing structure, but alter your advertising and copy. Rather than cut prices, highlight how the current price is actually valuable in the long run. With a higher price there is an expectation of a better product/service, so it is important to maintain or increase your own standards of quality. Excellent Customer Service can justify a higher price. Other things that can add value are: customization, a strong guarantee, and additional “bonus” materials.
Some other marketers will advise a more moderate adjustment to your strategy. This cautions against “slashing prices” but also realizes that customers do respond to a lower price point. Offering a sale on some of your products can entice buyers on that initial sale and could result in further sales for related products. On the other hand, it could encourage your customers to wait for the product they want, hoping that it will have a lower price in a few months.
Rather than join in on a price war with your competition, why not state why your product is better? What do you offer that they can’t? Play up your strengths and let the customer justify for themselves your pricing structure. In so many cases, what you have been doing or plan to do can be seen as providing value to your customers. The need for and value of a personal touch and good support will not change, so play to your existing strengths.
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