Competition is tough these days. Consumers and business
customers know you have competitors who will charge a lower
price. In fact, they don't even have to check.
Customers have learned they can ask you for a lower price and
often get it. If you don't offer some kind of concession, a big
percentage of your prospects will move on to another business who
WILL give them a price cut.
Price cutting is more prevalent in some industries than others.
I wouldn't dream of asking my doctor to drop his fee for an
office visit, but I wouldn't think twice about asking the
salesperson at the car dealership if they could knock a few
hundred off the sticker price.
How do you drop your price without losing your profit? I mean,
lots of sales are good (which you're likely to get if you drop
your prices), but lots of sales that don't make a profit will
bankrupt your business in a hurry. Here are a few tips:
1. If you recently dropped your price, point out that cut to the
customer, then give her an additional 10 percent reduction. Note
the total amount she is saving over your old price. When the
economy is tightening and prices are dropping, this strategy can
work well for you.
2. Vary the amount of price concessions. If you give the
customer a $20 price cut, don't give her an additional $20 price
reduction the next time she asks. Your customer will immediately
figure she can ask a third time and once again get an additional
$20 off. Instead, make your second price reduction $15 or $10.
This tends to stave off additional requests.
3. Most times, you already know how much you can drop your price
without even being asked. Don't give the customer your full
price cut the first time. Instead, offer them a smaller cut
first, then give a little more if they ask for it.
Many customers may not expect a huge price cut, and will be
happy with what you offer them. They simply want a sincere
gesture that you are willing to deal.
4. Don't keep changing your firm offer. I saw a business person
trying to sell a computer to a customer who seemed on the brink
of buying. "OK, if you buy right now I can take $100 of the
price but that's as good as I can do," he said.
When the customer still seemed reluctant, he added, "OK, if I
talk to the boss we can make that $250 off, but that's all we can
do."
I could see the light in the customer's eyes. She knew she had
the salesman on the ropes. She realized his final offer was far
from final.
All this is contingent on your having a pretty good profit margin
built into your products or services. If your business runs on a
very tight margin, you may not be able to make any concessions on
price.
Instead, offer an additional free or low-cost service. Provide
free advice after the sale, an attractive guarantee, or
additional bonus items you get or give at very low cost to you.
Frankly, if your price is already among the lowest, you may not
need to drop it further to get sales from those who might
otherwise want a price reduction. Simply point out how your
price is already lower than what competitors charge, for a lot of
people, that will be enough.
Many customers automatically assume that you're not at your
lowest price. By showing them you have already made strides to
offer very attractive prices, customers will often drop the
subject of a price reduction and buy without haggling.
About the Author
Meredith Pond and her team of top writers help you increase
profits without working harder. See Meredith's editing services,
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http://CheapWriting.com Reach her at
mailto:meredith@drnunley.com or 801-328-9006.