Coming Down in Price Without Hurting Your Business
People often think that lowering the price of one’s products or services is a sign that business is bad and you’re desperate to attract more customers in order to cut your losses. While this may be true in some cases, there are also many practical reasons why a business would want to lower prices even when things are going well. Sometimes it’s as simple as wanting to expand your customer base to a larger number of people—lowering the price can make your services more accessible to first-time customers because it’s more competitively priced than similar products. Whatever the reason, coming down in price is a task that requires a great deal of thought, as it affects both your profit margins and your image as a business. Here are a few things you should keep in mind if you’re thinking of making this move.
Firstly, consider how much of the product or the service will have to be changed because of the price difference. Packaging and advertising changes are ways to reduce the price of a product or service without compromising your business.
It may be necessary for you to make a few alterations in what you’re offering to your customers right now because of the change in price—but do think about how much this will affect the quality of what you have, and if it may be a turn-off to your longtime clients. Things like packaging or advertising are small things that you may have to change in order to reduce your costs, and that will definitely be the first to go without sacrificing product or service quality.
Say for example that you’re selling cupcakes. If you have to change up the recipe because you need to offer lower prices to get more customers, think about how many of the ingredients you will have to change, and if it will make a difference in the taste of what you’re baking—if the difference is a big one and not a positive one, scrap the idea and think of somewhere else where you can cut corners to present a more affordable product.
Also consider the fact that there’s only so much lower you can go from your original price before it starts to put you in the red or makes you feel like you’re selling yourself short. You should be able to take pride in your business model and the products and services you are providing for your customers—give them results that you would be satisfied with if you personally received them or had to pay for them. Say that your original price was something like PHP80 for a cupcake—a price slash to PHP70 doesn’t hurt so badly but will get more people to buy your cupcakes. But cutting the price in half to PHP40 is a bigger change, and will force you to make changes that may make your product less desirable in the long run. Sure, people like cheap things or discounts—but they also want bang for their buck.
If you want to cut down on your prices, keep your business ethos as the biggest consideration. Sometimes it’s better not to cut down too much even if it means getting more customers, because in the long run the way you package and price yourself as a business will affect the perception of your customers as to what they feel they should be paying. If you can’t offer a price change per unit, you can make a price slash by offering lower prices if customers buy more than one of a particular product, or you can offer a subsequent discount the next time that they avail of your service—those are ways that you can technically come down in price without looking like you’re going out of business. Buy one, get one deals are subtle ways of lowering prices per unit without the customer knowing—it makes them feel like they’re getting a bargain, without making you look like a discount outlet that can’t offer quality goods to discerning clients.
Optics are everything, and if you can handle it in this manner, you’ll be just fine. Don’t ever sell your business short. Remember to take pride in what you’re doing and to value your own products and services!