What do you do when people under bid their prices just to get your clients?
I have a competitor that is pricing his same products $1 to $2 dollars over cost. You can't cover costs with that low of margin. Over time his prices have gone up on my old clients but he keeps taking clients away also. He has other parts of his business that covers his costs. He isn't just about the supplies he sells.
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Answers (11-20)
Explain the Value you bring to the table with out talking negative about the competitor and then move on with a :)
NEVER be the cheapest! Someone else will always come along to be even cheaper and who wants to circle the drain anyway? Fastfood chains with their $1 Burgers almost destroyed each other for over a decade to be the cheapest, gobble-up market share. and ideally, destroy the competition in the process. Needless to say, it didn't work.
Ultimately, I agree with adding perceived value which almost always ties to underlying personal, emotional needs like fear of pain or lack of pleasure. Uncovering and directly addressing them is the first key to your own success.
In a competitive sense, I'd suggest being proactive by having an upfront conversation with new and existing clients about your refusal to play the pricing game. They have probably already been burned by it at some point where a vendor offers low prices to close business even if at a loss and then over time raises prices, reduces services, or compromises quality. Instead of playing the game, you've opted to be fair and transparent with them.
While many people "shop price", if their attention is directed to "value added services" they may reconsider. Value added services should include support after the sale, as well as quality of materials, quality of workmanship and what makes your service/product a different/better value from your competitors. Unique to you and invaluable to your client is your experience, your expertise and your knowledge, and should always be incorporated as one of your sales tools.
If the client is stuck on price only, you may want to reconsider if you really want them as a client. An educated client is your best resource for referrals.
WOW! 227 comments. Normally I read all of the comments before I enter mine. But not this time. That's just too many comments. So, here is my imput. YOU have to figure out the value of what you are offering. You need to express that in your marketing. Set yourself and your product apart from your competitors and let the world see the difference. When you are going head to head with someone that has the same product or service the difference comes in WHO YOU are. What most of your customers will do is read the reviews and decide who to use. Stand out with your integrity and your client's reviews.
There are several ways of thinking about this Kerri...
Sell products (cheaper?) to get services
just sell products
just sell services
sell services (cheaper?) to sell products
Figure out what you are...then see where your competitor is...from there you can start to think about a plan. I'm always concerned for business owners who don't have enough info to make decision for their business futures.
If my client leaves over price then they probably are not the client I would want to keep. Loyalty is earned and is a 2 way street. We had one client that paid on time and was very needy. They left for price and just over a year later contacted us asking for us to take them on again as a client. We did, at our standard rate and they had to start over to regain our trust. They had been at a discounted rate before.
Great Question/ Here is what happened to me this week and I even asked a competitor of mine whom wholesales stuff to our company to get his feedback on quoting this customer. Making a long story short well this customer showed us a quote that gotten from a company they have been doing business with for 10 years now. We offered a counter quote and saved this customer $30/Month on their leasing bill. Thinking that they're now going to do business with us since our quote was better. NOPE This didn't happened they emailed us Not Called us to inform us that their current provider match our quote. Sometimes it is so hard not to get angry and pissed cause it took time to put this quote together. So this is my story to your question.
I thank them for their time and interest and wish them the best of luck. Then say goodbye.
Sadly, many will need luck, especially that look at cheaper price alone to add value. We know our worth. One can ALWAYS find someone cheaper. But likely not any better, and certainly no one works harder than we do. NextHome Mountain Realty in the High Country
I would agree with Darryl, however, I am not sure what product that you are selling and what other products and services that you offer. Business has always been won by a lower price. Try to see what the price that your competitor won the business with. Go back to that customer and check with them on the price after 2-3 months, after 6 months, etc. Determine what (besides price) is important to them. It's important to try to keep the relationship. However, know that if that customer shared your price with your competitor, they may just be using you to leverage a lower price with him.
Maury is correct. Additionally If you do not have any other products that can help you to create more value consider bundling, upsell and downselling, joint ventures, even affiliates to help with that. Also take a look at another niche within you own or outside to see if you can identify a new type of prospect. You can do this. Talk to the customers you have to see why they really buy your product or use you service. If it is just price or something else.