There is so much pressure on small businesses over pricing these days – there are special offers left, right and centre. Be that Black Friday, Cyber Monday, Pre-Christmas sales, January sales, sign up discounts etc or just a sale because it happens to be a Wednesday!
So here are my key things to remember when feeling the pricing pressure:
Loss leader mentality
The first thing to remember is big businesses will often sell a new or key item at a low margin or even a loss so as to get people in the door and buying other items too that are at a better margin – these are called loss leaders and it is an age old marketing technique. They can afford to do this, small businesses generally can’t.
Apples and pears … they aren’t the same
When you are looking at what someone else does compared to what you do, are you actually comparing the same thing or are you comparing apples and pears? This applies regardless of whether you are a product or service-based business:
If you are a product-based business – are their products the same quality, the same size, the same materials, the same ethics, is postage/delivery included or excluded etc.
If you are a service-based business – what are their qualifications, experience, is the service the same, do they have the same insurance etc as you do, do they work on a fixed or variable price model
You don’t know what another business has as their aims and objectives:
It could be a “hobby business” whereby they run the business as a side line to keep themselves busy
It could be a “life style business” whereby the aim is to make money for the extras and niceties in life
It could be that it’s what puts food on the table and pays the bills.
You never know what someone else’s motivation is.
Know your own worth
Only you know what it has taken to get you to where you are, be that the study and qualifications, the experience you have, or the sacrifices you have made along the way to get to where you are. Only you know what you’re aims and objectives are and the quality of your product or service.
So be confident in what you do, what you offer and your pricing – only you know if you can discount and if you want to. Your pricing won’t be right for everyone .. and if it is, then chances are it’s too low!
And remember …
COMPARISION IS THE THIEF OF JOY