Insights
Win more business, without reducing your prices
Dropping your price to win business is often a fool’s game. Anyone can drop their price. If you win business purely because you are the cheapest, you will lose the business just as quickly, when someone else offers a cheaper price. If you sell a commodity then don’t bother reading the rest of this article. If you sell a differentiated service or product then read on.
A commodity is where we sell the same product or service as our competitors. Why would anyone pay more for the same thing?
Before you reduce your price consider these implications. The price reduction will come straight off your bottom line profit. The price you charge this time will influence the price you can charge next time to this customer, and the next time and the time after that. This may impact your relationship with your client and even your self-belief and confidence.
There are three key strategies regarding price. The first two strategies are about understanding your value and how your client is better off afterwards. Find the right moment and ask your current clients why they like doing business with you and how they have benefited from your product or service. Ask really probing questions to get under the skin of what they value and what is important to them. Do this with as many clients as possible and then look for trends and patterns in what they are saying. See how they compare you to your competitors. How are you better? In what ways are you better?
When you have distilled their answers, the third strategy is about understanding how you are differentiated from competitors. The more differentiated you are from competitors in ways the customer values, the more you can charge a premium price.
Focus the client’s mind on value, not on price.
