Have you ever been tempted to lower your price on one of your products and services drastically to get customers?
From looking at a number of websites this seems to be gaining some popularity. One I saw today offered logos for $99 and the other services offered at a much higher price.
Sometimes in retail you see drastically reduced prices on a particular product to get people in the store. Once people visit one idea is to get them to buy other products at their full price.
However offering very cheap prices is not always cheerful for your business or if you are a customer.
Here are a few traps of the low price option:
Competition
The problem of lowering your price so much, especially if you do it for an extended period of time is that you can get compared to the whole host of free or other very cheap options available.
This means you are competing against them and not against the higher priced ones that you intended.
If you are competing against free or even lower alternatives then you may be seen as more expensive even at the low price and lose out anyway.
Perception
If you are a customer as in the case of the logo above be aware of the limitation in what you get. For example in the form you had to submit there wasn’t any mention of your positioning, customers, competitors or even where you are going to use the logo.
These areas are covered when you get a designer to develop your brand identity. Many times the old say is true that you get what you pay for and if you are not aware of the limitations of the service as in this case you may regret it.
Customers
Short sharp price discount promotions can work and usually on products or services that are bought on a frequent basis. Customers may stock up on products or continue buying the service if is normally done on a regular basis and that can be okay.
If there is not a high chance that the types of customers you are attracting with these cheapies will buy other products or services at a higher price then it doesn’t make sound business sense.
While it is tempting especially when you see other businesses doing these types of promotions it is worth considering all aspects before you jump in. Above all else do some number crunching to see what the impact can be if you take this approach.
What are your thoughts on this?
Great summary, Susan. Once again, you speak the truth with authority! Best regards, P.
Thanks Paul, glad you liked it.
The Marketing Trap, Cheap is Not Always Cheerful…
Have you ever been tempted to lower your price on one of your products and services drastically to get customers? It may sound like a good idea however there are a few traps if you do for your business and if you are a customer….
Your article The Marketing Trap, Cheap is Not Always Cheerful is very informative and helpful tool for both costumers and store owners.
elpidio recently posted..Why does God tell us to flee from evil?
Thanks Elpidio
Hi Susan
I so agree with you. I will only sell organic lavender products although I know there are cheaper alternatives that some people choose to buy.
I have written articles outlining why I believe these are better and safer to use. Then it is up to my potential customers to make the choice. I just give the information so at least people can then make informed choices.
Patricia Perth Australia
Patricia@lavender-oils recently posted..In A Spot of Bother? Lavender Could Be The Answer!
Hi Patricia,
Your knowledge and value comes through so well on your blog as well as being a trustworthy source of information.
Thanks for stopping by.
I think you’re right on the mark with this article Susan. I’ve always believed that you can’t really run a successful business if you’re competing on price alone. The key is to differentiate ourselves from everyone else to show our clients and customer the value of doing business with us. Patricia is an excellent example of someone who understands this concept.
Sherryl Perry recently posted..6 Reasons to NOT Build a Website
Hi Sherryl,
I agree with you about Patricia. That is a differentiator and customers are pretty smart and know if you use price they have the upper hand especially if you want to do more business with them.
Thanks for your comment
Logos for $99 makes me think of all the third rate companies offering that on a regular basis.
Hire one of those and you will end up with a “copy” of someone else’s logo.
So it’s really questionable if a serious company wants to be compared to those operators? Or worse put in that bracket. As you say, you really have to ask yourself if this is a good idea?
Catarina Alexon recently posted..Is Soros right – Could the Euro crisis destroy the European Union?
Hi Catarina,
Unfortunately there are a number of small businesses doing this and probably do not realise the implications of what they are doing to their business or brand.
Thanks for your comment
The best policy with pricing is to be consistent. Frequent discounts and price cuts for routine services will only confuse customers and cause them to question your commitment to quality. Your pricing scheme, whatever it is, has be to be reinforced up with an air of confidence and professionalism on your part. It is impossible to get a potential client to go with your prices if you yourself are unsure and tentative.
Hi Alex,
Good point about consistency and the air of confidence and professionalism. Thanks for adding this to the discussion.