Are you trying to compete with the deep discount stores that buy merchandise in huge lots, then 'pass the savings on'?
If you are, as a small business, you may actually be hurting your sales.
Lowering your prices can easily cut into not only profits, but the number of sales you make. It lowers the
perceived value of the merchandise or service you're offering.
Oftentimes, in the eyes of the average
consumer, cheap is cheap, and you get what you pay for. Deep discounters never sell 'top of the line' merchandise.
The single most important thing you sell is trust, no matter what the product, or range of products may be.
In that trust relationship the customer expect you to deliver a top quality product or service at a
reasonable, but not cut rate, price.
Cut rate prices break down the trust relationship - the idea becomes:
How can it be so cheap and still be any good?
There are a couple of simple questions you can ask when figuring out the cost/value equation for anything
you sell. Will the customer be more satisfied, and happier after buying your product or service or would
they be happier if they kept their money in their pocket?
Does your product/service either reduce customer pain sufficiently to charge the price you are, or give a sufficient degree of enjoyment to charge the price you are.
Pain reduction isn't necessarily thought of in terms of the kind of pain you'd take an aspirin for, but
rather think of something like calcium tablets.
Calcium reduces the probability that people will get osteoporosis in their old age. This is a huge pain reduction factor, therefore calcium tablets cost more than many other comparable minerals.
The same can be said for other vitamin supplements, when the value of them is realized by medical studies, their price tends to go up.
Find ways to add more value if you're in a competitive market, but don't cut your lifeline with cut rate pricing.
Make yourself stand out with messaging that gives the customer a strong sense of the high quality of your products or services, then tell them not to expect any less.
You can increase not only sales, but
profit margins at the same time.
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