Don’t Brag About Low Prices, Brag About Value
Pricing is one of the most important elements of a business to think about. Small business owners understand that pricing can possibly be the single factor that determines the success or failure of his or her business. With so many competing technologies available today, thanks in part to the internet, a lot of small business owners are starting to believe that slashing prices could immediately lead to more customers. You can hear sales rep incorporate this sort of language in their calls more and more, “We provide the lowest prices so it’s affordable for everyone”.
However, consumer education is at an all time high. Consumers understand that all the hassle and stress that comes along with a potentially cheaper product/service is not always worth it. Cheaper prices can also indicate cheaper products/services and can turn off consumers.
One of the best examples from a customer perspective is technology outsourcing. Small businesses for years, in order to save money, have been outsourcing the development of their websites overseas particularly in India. With the rising cost of building a website in the United States, small businesses are intrigued with developers overseas boasting rates at “9/hr or 12/hr”. Although there are many quality developers in India, those that charge ridiculously low prices tend to take shortcuts in building websites. A lot of small business owners didn’t understand that although the design of the site seemed up to par, they themselves would have to closely manage their sites due to shortcuts some of these developers are taking. Some small business owners are starting to understand now that for the most part, a developer offering to create your website for less than $30/hr is probably not credible and doesn’t value his or her self enough to even attain respectable compensation. The best developers even overseas promote how they bring value to the web development process in an efficient enough manner that reflects in the price.
Another example that is always comical is SAT tutoring. If you go on Craigslist.com you can see numerous tutors boasting that they charge the lowest prices for tutoring. Why? Why would any parent allow their student to prepare for quite possibly one of the most important exams in a student’s life by working with a tutor that boasts about having the lowest prices? Rather than boasting about the lowest prices, these tutors should boast about their background, experience and education in combination with the price they are offering. Perhaps they are offering a low price because of a personal mission to help those who can’t necessarily afford standard prices. Or perhaps prices are low because tutors teach multiple students at a time. Regardless, they have to qualify their prices in order to assure potential clients that the price is low not because of the quality of service but because of another factor playing a role.
Pricing can get tricky but the most important things to remember are who your target demographic is and justifying your price by showing the value you provide. Don’t justify your price by comparing it to others or claiming your price is the lowest. Bragging about price rather than value will only caution and alert the potential customers who are willing to spend money to properly serve their needs.
