The bottom line is that you’ll find yourself in the same place you are today but with the downside that you will have significantly lowered your margins.
In some ridiculously price-sensitive markets you probably won’t have any choice. In these markets, it really IS all about pricing. If that is the case, make sure you run through these tips on how to compete successfully on a pricing strategy.
Communicate your product or service to have more value
If everybody in the market is selling denim shirts for $32 and you present yours as just slightly loose and comfortable around the shoulders and sell it for $49, you could be offering something of more value at a higher price. And even if it’s going to cost you a bit more to make those upper sleeves a bit more comfortable around the shoulders, you would still be ahead of the game profits-wise.
This “additional value” doesn’t have to be tangible. You’ll just have to look for something that may be perceived as something of value, which may rationalise a higher price than your competitors’.
Offer additional value for the same price
If everyone in the construction materials market is going bonkers selling a gallon of paint at $15.99, and you sell yours for the same price but have arms length referrals that claim it’s of better quality because it lasts longer or needs less coats, you are actually offering more value for the same money.
Offer less value at a much lower price
If competition is selling boys’ bicycles complete with innovative accessories and modern gadgets at $59.95, strip yours down to the very basic and sell it for $29.95 or more than 50% cheaper. You would in essence be offering less value at a rock-bottom price.
Offer the same value for less money
Everybody’s selling a top-quality two-burner electric stove for $69.99. If you can sell the same top-quality stove for $67.99, you’re essentially offering the same value for a lower price tag. You’ve got to make sure though, that you’d still be making money, otherwise, there is no point?
Translate your product values into dollars and cents
If you and the competitive business are offering complementary logo design services at the same packaged price of $130, be the smart one and translate this into what this really means to your customers. It means they’ll be saving about 6 hours of time if they were to do it themselves. If you multiplied this by say, an average designer’s hourly rate of $35, the value to your customer would be $210.This makes it more concrete for the customer to see the savings value they’ll get out of you.