Price Is Not As Important As You Think. This is something I harp on and on and on about so I’m sorry if I’ve mentioned it before. But price is not important.
There are numerous companies selling what you sell. One of them is the cheapest. Remember, only one of them is the cheapest no matter how many are selling the same thing. But all of the others have still got customers. Explain that.
How is that happening if it’s price?
Let me give you another example. At that moment, it’s January and, in the UK, there is a huge price war in the supermarkets. Times have been tough in recent years due to world economic and financial problems that have been heightened by media hype.
People think they have no money so they’ve been looking to cut costs. Therefore, they’ve gone to the cheaper supermarkets.
We have Aldi and Lidl that are German discount supermarkets. They have been doing their thing quietly and have been eating into the market share of the big guys; and the big guys have shareholders.
This is Tesco, Asda (Asda is owned by Walmart), Sainsbury’s and poor old Morrison’s. They are all suffering and they have huge, huge marketing budgets.
So what do they think is the answer?
They’ll try and compete so they boost their advertising to say “We have cut 1000 prices in Sainsbury’s.” When you get a till receipt, it tells you how their price compares to Asda.
All that’s telling me is that I should go to Asda because Asda was cheaper and they’re trying to be as cheap.
But if it was down to price, wouldn’t all of those people have abandoned those supermarkets completely and gone to Aldi and Lidl? Everyone still shops where they shop.
It’s their branding and if they cheapen their brand, where have they got to go? How are they going to increase or add a premium price to the brand?
There’s got to be another way.
Everyone aspires to having quality. So, you need to enhance your customer’s opinion of you. I mentioned this earlier in the week. Please tell people that you are not the cheapest.
My company is “online”, so we are technically discounted already as we sell for much less than the “offline” companies. But we’re not the cheapest discounter, if that makes sense.
And we say, “Of course we’ll never be the cheapest because….” And with this message we are instantly telling our customers that the price is not important. We explain we have the best quality products, we have the longest warranties, and we have the best return policies, this and that.
We have reasons for people to still want to buy from us even though our price isn’t the lowest.
It’s not price, people.
To force the point, I’m going to give you a Weekend Challenge. This one will be scary because it involves pricing. So take out your pen and pad or your piece of paper and write down your top five competitors.
It doesn’t matter who they are, it doesn’t matter how big; just the people you think are your top five competitors.
Then next to each one write down whether you think their pricing is low priced, average priced, premium priced, with premium being expensive or high.
The next thing is look at each company, look at their website, look at what you know about them and write down against the five whether any of them match up, whether the look or the feel, in your opinion, matches their level of pricing.
Now I doubt that that equates. I doubt that one of them looks cheap and is cheap. I doubt that the one you think has the highest prices looks better quality, looks more luxurious.
Then look at yourselves and see where you think you fit in. Say if you think you fit in as average (I bet you think you’re average, by the way), can’t you raise that?
Is there someone who’s charging more that’s still got customers? Let’s up our prices. Don’t be scared.
I want you to then look at your prices and add a price-rise. If it’s a service, if you charge 40 dollars an hour, 40 pounds an hour, charge 44 pounds, charge 49 pounds.
All the people that have been paying that price for years and are already customers can be grandfathered in with their current price. Put it up for the new ones.
Once you find that new customers come along and have no qualms in paying that price because they didn’t know what your price was before they arrived, you may consider this is easier. You’ll earn more money for doing the same amount of work. Maybe you can go back to those others and say “We have to put the price up due to, or we haven’t had a price-rise since blah, blah, blah.”
Whatever reason it is. Explain.
If you’re providing a quality service, that company will still want to pay your price.
When you use a solicitor, a lawyer, an accountant, before your client arrives they have no idea how much you charge. You could be 100 dollars an hour. You could be 200 dollars an hour. You could be 150 dollars an hour. It doesn’t matter.
It is down to what you are going to provide and if they feel they’re getting value.
So that’s your weekend challenge. I want you to put your prices up. Do less work or the same work. Earn more money.
Trust me. I’ve done this before. It was scary. But it didn’t make any difference whatsoever to our customers, not a jot. But we made more money.
Have a fantastic weekend and have a more profitable next week.