There are a number of ways to get ahead of the competition; you can provide a better product, you can provide an outstanding experience, or you can provide a better price.
So which do you choose?
A lot of small business owners lean towards a lower price, even if they already have a superior product. It can actually kill your business, after all, your business is run on profits, and if you aren’t making any…
It’s an easy move, but not necessarily a smart move.
The smartest way to win a client (and retain the ones you have!) is by providing an outstanding experience. That will take some effort and creativity, which is why most people prefer to reach straight for the discount option.
Discounts work in certain situations, but they are definitely not an approach every small business owner should use, and not without careful consideration. At the very least you should look at your assets and find ways to give them volume before you start sabotaging prices.
Not everything is about price. Deciding what product to buy or which party to hire combines a number of different factors:
This doesn’t translate to lowest price, this translates to the bang you get for your buck. Do people feel that they get what they pay for? Ideally, they should get more than they pay for if you under promise and over deliver.
Some ways to show your value is to highlight everything in your package, tangible and intangible. Include things that increase the performance of your product (your education, your background, your years of experience).
Ask for testimonials from previous clients who can vouch for the quality and value they received.
Add in extras that increase value without lowering the price.
Being unique is one of the most valuable aspects of your business. If people have a choice between identical products, then they will choose the cheapest. Step out of that line by not conforming to what everyone else is doing. Be bold and unique, look different, feel different and highlight what your differences are and what impact that will have on the client, so they can make a choice based on results.
If you are in a position to offer your services at varying levels, you can give clients a taste of what to expect with a low-cost package, then encourage them to upgrade at a later time.
Not everyone can afford the high-end package, even though it’s the most attractive one you have. If your client has only just met you, asking them to invest a lot of money may be confronting to them, they don’t have any reason to trust you, not yet.
The solution is to offer tiers with different package prices. Three tiers work best, the entry level tier is just a taste, second is more involved, your final tier has all the bells and whistles.
The price will reflect the level of input from you. Once an entry level customer gets to know your services and who you are they will be more likely to scale up to your other packages.
If you are unsure how to create levels in your packages, a great tried and tested method is:
Measure your profit margin at the full-scale price. Is there a way to lower your prices and keep the profit margin the same? Basically, this is a matter of lowering your costs while selling the product for less, so you don’t cut into your own profit. You might want to look at your expenses and see if you can change your supplier or look at outsourcing work to find something similar that is cheaper.
If you are wondering if you should offer a discount to win a client remember it should be done with a lot of consideration and measurement of the impact. Ask your customers what they want, it might not be lower prices, which means you are hurting your bank account for no gain. Get creative and find solutions to selling the right product at the right price.
Before you consider offering a discount on your services, book in a free strategy session and will brainstorm some alternatives that will suit your product or service.
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