Four ways to avoid competing on price
Who do you think is the low-price leader in retailing?
Once, the quick answer would have been Wal-Mart. But here's a cautionary tale of what can happen when you compete on price: A new study from retail consulting firm WSL/Strategic Retail shows 88 percent of customers no longer believe Walmart has the lowest prices.That's got to hurt, given how much time and money the retail giant has spent on pitching its "always low prices" slogan. It's also likely painful for Wal-Mart's vendors who've often strained to get their costs down to fit into Wal-Mart's super-low price narrative.
Where do customers think prices are cheaper? The Internet, as well as other discount retailers and grocery stores.
Given this changing perception, competing on price is even less attractive. So how can you avoid it? Here are four tips of my own:
1. Benchmark. Find out where you stand on pricing compared to other companies in your industry. Its possible competitors have raised prices while you’re stuck to the bottom.
2. Develop unique products. It's best to offer products and services that are unique to your company. The reason is, when competitors hold sales, you won't be similarly forced to cut prices because your offerings can't be price-compared. Be specific
3. Bundle your product with services. Take a look at how Jonathan Fields has bundled his new book, Uncertainty, with his consulting. No discounts here. Bet they're selling like hotcakes. This is my favorite if I ever write another book; I will follow a similar approach like Jonathan.
4. Build your reputation. When you're known as the best in your industry, price isn't a problem. Clients expect to pay you a premium. Get client references, video testimonials, or at least ones where you can use customers' pictures next to their endorsement -- they're highly impactful in helping clients envision themselves using your product.
Pricing is a key factor in marketing and selling your product or service. Whatever price your choose, make sure that you have an end objective in mind and that your pricing strategy supports your end objective.
Never compete on price, unless you have a cost advantage that is near impossible to duplicate. Competing on price is almost always a losing proposition.