I’m noticing an increased emphasis on discounting prices, especially with the emergence of mobile couponing and services like Groupon. Then there was this recent discussion on Eric Brown’s Facebook page. So what should you do about price?
My opinion is that you should almost never lower your price. It’s basically a confession that you were charging too much before you lowered your price. If you think price is really the problem, and not value, offer a lower-price alternative. A “lite” package of your product or service. Two benefits here: this pricing strategy actually helps customers make a decision to buy by providing context, and you’re not doing the same amount of work for less money.
There’s a lot to be said about pricing and discounts, so I asked for some insight from my Twitter network. The responses contain plenty of wisdom and ideas…
|I think competing on price is rarely a good prospect for victory. I prefer to compete on value for price offered.
Chris Brogan – Blog
Author of Trust Agents
|Reid Travis – Panchero’s
Social Media Manager at Panchero’s Franchise Corp
|Matt Ridings – techguerilla
President & CEO MSR Consulting
|Eric Brown – The Urbane Way
Founder at Urbane Apartments
|They are the last of a series of bad decisions. These leave a business with no other option than to lower their price. And by doing so, they confess their sins from those bad decisions by saying…we have no real value for you. Others offer the same (or better). But…we’re cheaper.
And what about your existing customers? Do you discount their prices? If yes, now you’re in free fall. If no, it’s only a matter of time before they see your new prices and leave.
Clearly some industries race into commodity hell. You have no choice then but to lower your prices. That being said, you don’t have to compete to see who takes their company and their customers and their employees over the edge. Find what value you add to your customers. Add it and more. Be sure to communicate it clearly to your customers. Help them be clear in order to make good decisions for their needs.
|Discounting to get customer is a dangerous game and only one supplier can win that game. I would recommend adding value and distinguishing a product/service another way.|
|Dropping your prices is the lazy way of getting sales in the door, and the problem with lazy ways is you may never be able to raise your prices to what you want them to be again. The impact on your brand can be enormous and long-term.
Only after you’ve done all you can with your marketing should you make a decision to drop your prices. I’m not saying you’ll never have to lower your prices, what I’m saying is try other things first. (And yes, you can try a sale for a short-term solution to get some quick cash in the door, but don’t make it a too frequent event or it’s just turned into another way of lowering your prices.)
|Andy Wright – Brand Habits
|products) will fill all the crevices and you can top it all off with water (entry-level products). Attracting clients at the “water level” allows them to try you out without much financial risk. If they are satisfied, they will keep moving up.
Paula Pollock – Blog
CEO at Pollock Marketing Group
|Customers hesitate for a number of reasons, which all boil down to: does this offer really work, and will it get me the results that I need? Discounting your prices is a way to avoid addressing this question head-on. It is admirable to want your clients to get the help you offer sooner rather than later. So address their real questions, which rarely center on whether they are going to save 10-20%. Then they can make a true decision about whether your offer is something they want, instead of just another disposable “good deal.”
Mark Silver – Heart of Business
Founder of Heart of Business
|What I like about the Groupon concept is that it guarantees volume in exchange for a price concession + generates word of mouth because of the community aspect of the process. Ideally, it’s used to move products/services when little alternative business comes in and the cost to serve the customer is lower than the traditional means of doing so, thereby justifying a price concession.
Christine B. Whittemore – Simple Marketing Blog
Chief Simplifier at Simple Marketing Now
|effect. Consider the following:
Keeping prices at their level may be easier said than done, but whenever possible, it’s always the better choice.
|you understand the “pocket problems” of your market and you’re willing to make it easier for them to buy what you sell. And you don’t have to discount to do this, either – just know what price points you need to hit and develop a product that you can market for that lower price. A “lite” version that still delivers great value. Is there another way to structure the deal so that cash flow is easier? Can you bundle in a smarter way?
We could discuss a number of options here that make sense and don’t devalue your offering – what’s important here is to separate the value from the price and give your market an easier way to say “yes.”
So where do you stand on pricing? How do you handle the urge to discount?
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