Trusted Somerset Area Small Business Advisor Weighs In On The Clamor To Lower Prices

Trusted Somerset Area Small Business Advisor Weighs In On The Clamor To Lower Prices

December 11, 2012

I’m still digesting holiday cookies this morning, you? Sometimes I wonder if all of the sweets which go around this time of year are a mass conspiracy established for the continued financial health of the health care and fitness industries.

Or, it could just be that we all like to eat those things.

But moving on … we’ve been sitting down here in our Somerset Area tax accounting office with some of our business owner clients for end-of-year planning and evaluation, and what some of them are telling me is that they have been feeling a rising pressure from their employees, competitors and (less often, ironically) from their clients, to lower prices.

I have been known to weigh in on this topic. And I will do so again…

Trusted Somerset Area Small Business Advisor Weighs In On The Clamor To Lower Prices
I discuss this all the time with my business owner friends here in Somerset Area, and beyond — how to price their services. You see, often, we might hear consumers say, “Well I would buy it if it were in my price range.” And, that idea tempts many business owners to lower their prices — simply to sell more products.

Especially during times of economic uncertainty, as now, this can be an extremely powerful urge.

However, as you already know, price reductions sometimes create more problems than they solve. I’ve seen too many businesses, even just here in Somerset Area alone, jump down to lower prices, only to see their revenues, profits AND business fall.

Here’s some of what you might see price reductions create within your business:

* Decrease of net profits
* Customers rush to the purchase of lower quality products
* Increasing customer demands to drop the price even lower
* Requirement of even more sales to make up the difference in revenue
* Needing a larger quantity of products and inventory to make up for lower margins

And, in the end, as John Jantsch (author of Duct Tape Marketing) says, “There will always be someone willing to go out of business faster than you.”

Remember this: price is not a benefit. The close of a sale is not determined on the cost of your product. If you truly “sell” your customers and prospects, they will purchase your products/services no matter what price you determine.

That’s the plain truth–and you’ve probably seen it in your own purchase patterns.

If a customer or prospect doesn’t buy–and they claim the cost had something to do with it–you can guess they probably wouldn’t have purchased anyway.

As a small business owner, and marketer, your job is to sell your products and services. But the actual art of selling has nothing to do with the price of the product.

By the time your contacts find out about the price, they should be determined to purchase no matter what the cost.

So, find “real” benefits (value) to sell to your customers and prospects. Help them to see how great their life is with your product, and you’ve got a customer. Point out their current pain, and your contact will do anything to get rid of it.

Set your prices and hold fast. If you’ve marketed and sold correctly, you will still have customers anxious to do business with you.