Price fight

from the book "NO EXCUSE! in business"

- What else?
- What-what else? - John asked me back.
- What else bugs you?
- Nothing but the strategy. The right way.
- You mean by...?
- The price. The price of course - said John finally.

I remained quiet because I was sure about this from the very beginning. Unfortunately business people have a kind of automatism that the easiest way to win a business is by giving discounts. However I think this is the laziest and the less effective way. Less effective because sales guys easily give discounts, which reduce and kill our profits. Engineers are ready to provide extra services, which is increased work not compensated by the client. Therefore I would never consider the decreased pricing as a marketing or a sales tool. It is simply not healthy for the business.

- Look John, there are three very different issues here. The first one is the crisis, which is one of the greatest tool to improve your income. However we can also talk about the competitor fight and the price fight, which are two very different issues. To handle the competitors and the price issue you have to make a difference.
- Yes, but we are in the same field.
- And then what? Is it a problem?
- Ok, what about the price? - asked John.
- Please do not avoid my question. Let me explain it in a very short way.
- Okay.
- The main problem is what you have also probably noticed that the number of the newly formed companies are intensively growing. All of them are looking for profit, however they can not offer the same price levels as their competitors, which are already in the market since twenty plus years. So ninety-nine percent of the newbies are playing the same old card, which is: they are cheaper.
- That’s it! - said John with a huge acceptance in his voice.
- But this is the trap. They can not provide high quality on low price however as it seems the high quality service providers are forced to reduce their prices. Therefore if you are joining this game you will loose your profit.
- What can I do?
- You can make a difference by realizing something.
- What? What? - asked John in a very excited way. He was like a child in the chocolate store. He wanted the answer immediately.
- That something is relative. None of the products or solutions have an absolute value. How much is the value of a product? Exactly the same what your customer is ready to pay for it.
- Yeah, but everybody wants the cheapest solution.
- Really?
- Really.
- Did you buy the cheapest suit?
- No. Of course not.
- Did you buy the cheapest car?
- No.
- Are we eating now in the cheapest restaurant?
- No.
- So does the price really matter?
- In these cases no.
- The price never really matters! When you are able to provide something that the client wants and what makes a real difference in your market, then the price becomes a secondary issue. The real problem is that most of the marketing people can not educate the prospective clients.
- What do you mean by this? - asked back John.
- The price. This is what all the customers see. Why?
- Because it is obvious?
- Because there is nothing else. A good marketing strategy is capable to educate the client to the benefits, related services, added values and it shows the prospective clients why is it makes a positive difference to buy that specific product or solution from you.
- Client education.
- Yes and with client education you are able to form your market or even more you are able to open a new market for yourself. Even if you sell the same product as your competitors you still have the possibility to make a difference.
- So it is all about the additional things?
- John, why the hell are you going to a restaurant?
- I do not know. Really. - he laughed.
- I am not going to the restaurant because of the food, because I can cook too. I am pretty sure that when you are hungry you can make something nice at home. I am not going there either to meet with my friends or business partners, because I can meet with them anywhere else.
- So why are we here?
- Because of the service. - I stopped for a little moment then I continued. - The service is what really counts. I am coming here because I like how they are seating me, how they are serving me and not to mention that for these hours they give me the feeling that I get something special in exchange for my money.
- Added value.
- Difference my friend, difference. If I would only see the price tag I would cook at home. The price never really counts.
- It maybe sounds stupid but I am starting to agree with you - said John and this felt very good.

Paperback:  229 pages
Publisher:   Lulu
ISBN:  978-1-300-52746-6
Language:  English

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