Ryan Anys | Freelance Copywriter

7 Reasons Why You Should NEVER Compete on Price

Written By Ryan

When your business is struggling to gain traction in a crowded field, what’s your first instinct?
FIRE SALE!
Drop your prices and would-be customers will start flooding through your proverbial doors. Woot! Woot! In fact, you’re likely to wind up with TOO MUCH business! But hey, there are worse problems, right? And meanwhile, you’ll be too busy counting your Dolla Dolla Bills to worry a wink anyway.
Or at least you’d like to think this is how it would play out. But in reality, it turns out not so much…
And here’s 7 reasons why:

1 Competing on Price Reduces Your Services to a Commodity

No matter what your line might be — real estate agent, attorney, accountant, financial planner, or the like — your business is bound to be one of MANY options.
And when your primary point of differentiation is price, your business becomes just one more choice vying for attention among countless other “products on the shelf” all claiming “rock bottom prices.”
In this scenario, it’s a race to the bottom that relegates your business to the “bargain basement” (along with all the other bottom feeders).

2 There’s Always a Cheaper Option

The moment you begin promoting deep discounts, a flood of prospects show up with competing offers that are EVEN LOWER. Which, of course, they want you to match.
Or even worse, they ask if you could possibly knock a little more off your already low, low price. (And only the polite ones ask. The entitled sort just flat out DEMANDS.) Never mind that you’re already barely breaking even on this venture.

3 Clientele Quality Quickly Plumments

I’ve preached on this subject quite a bit, but it’s such an overlooked, yet fundamentally important issue, that it definitely bears repeating (again and again)…
The purpose of marketing IS NOT just raking in as many leads as possible. The ultimate purpose is to attract your ideal clients. And attract enough so that you’re able to pick and choose the clients you ACTUALLY want to work with and work on projects that GENUINELY interest you.
But the moment you begin competing on price is the moment you swing your doors wide to the type of client you DO NOT want to work with.
How so?
Because prospects looking for lowest price always want the moon and don’t want to pay for it.
I can tell you from personal experience in my own business, in addition to testimony from scores of my clients, when it comes to working with “bargain hunters,” there are a number of drawbacks…
First of all, bargain hunters are always fixated on “quality” (which is highly subjective), because they’re suspicious a “discount” means you’re going to try and weasel out of giving them what they actually paid for (never mind that they paid far below sticker price). So they hound you over every detail to ensure they get their “monies worth.”
And secondly, bargain hunters always try to grind you down EVEN FURTHER on price. Bargain hunters negotiate the scope of work in an effort to cut out aspects of your services they deem “irrelevant,” in exchange for a deeper discount. But then, when the finished product doesn’t turn out the way the expected (because they insisted upon gutting the scope of work), bargain hunters demand the elements they initially negotiated out be replaced. And, of course, refuse to pay another “red cent” above the originally agreed upon price.
For example… Imagine you’re a gardener, and a homeowner talks you into lowering your price in exchange for excluding edging (which is normally part of your lawn care services). Then, when you’re done, the homeowner balks because their lawn “looks terrible.” Well, of course it does, because it needs to be edged. But the homeowner insists the terribleness is because you did a poor job, and refuses to pay until you “do it right.” In other words, do the edging for free.

4 It’s That Much Harder to Raise Your Prices

Once you drop your prices and make it a focus in promotions, clients assume those discounts are available FOREVER. If they hired you for 20%, 30% or even 50% below sticker price in the past, why should they pay more now?

5 Prior Clients Get Angry + Demand Discounts on Future Projects

Let’s say a client you’ve worked with in the past gets wind of your discount. They’re likely to wonder why they had to pay more for the exact same service. And apt to ask for discounted pricing on future projects.

6 Too Much (Low-Paying, Low Quality) Business

OK, imagine your gambit works, and you’re flooded with tons of new business. Now, you’re committed to a fist full of work, all at below market prices, with clients you’d rather now work with.
And you’ve got plenty more prospects banging on your door. But they’re all looking for deep discounts, and they’re all far from your ideal client
So, now you’re wedged in between a rock and hard place, resentful of making cents on the dollar for your hard work, and headed for inevitable burnout.

7 Never Sell Yourself Short

If you’re failing to gain traction in your marketplace, no matter how crowded the field, don’t sell yourself short.
In other words, rather than differentiate your business (from your competitors) based on price, base it on your USP — Unique Selling Proposition.
What’s different about your business? What do you provide that your competitors don’t? What do you do better than your competitors? What niche do you dominate within your greater industry, and how can you leverage that to stand out from the competition?
Start by answering these questions rather the copping out with a “BIG DISCOUNT” offer.

What About You?

If you’ve ever discounted your services, how did it impacted your business? Good, bad, or otherwise, drop by my Google+ page and share the results!

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