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cheap cheap cheap cheap

In nearly all industries, there’s a big group of consumers looking for the cheapest option.

Often these consumers are:

• more demanding
• unappreciative of the product

As a new business owner, often your instinct may be to compete on price. It feels like the right thing to do and it’s an “easy to define” differentiator.

Some of the problem associated with competing on price are these:

• You may have to compromise on quality
• You may have to compromise on support
• You may have to compromise on aftercare
• You may have to compromise on customer satisfaction

What does this mean? It means you may have to compromise on the reputation of your brand.

Here are some more reasons not to simply compete on price:

• You have to sell high volume to make money
• The majority of your (unimaginative) competitors will be looking for ways to undercut you
• It will be hard to attract the best staff

Here are some alternatives to being the “cheapest”

• Offer the best customer experience (my favourite)
  Once you get the first sale, people will start talking about you
• Use the best materials
  Plenty of people are willing to pay for quality
• Provide your service the fastest
  We are conditioned to understand that if we want a service quickly, we can expect to pay more
• Be the most versatile
  Could you work weekends, evenings, holidays?
• Be the most ethical or environmental
  Lots of socially responsible folks out there.
• Be the friendliest / most respectful / courteous / best dressed
  Good old fashioned values make customers feel respected and safe
• Offer the most personal service
  Small companies can adapt their services very quickly and easily to fit the customer
• Be the safest option
  Lots of people spending other peoples money out there (corporate budgets etc). Criteria number 1? Don’t make them look stupid.
• Be the most expensive
  There’s a reason you spend so much money on fashion, glasses, cars (or whatever your vice)…people like to show off.

It is of course a nonsense to think you can be the “best” in all areas, but if you pick cheapest, it’s going to be pretty hard to develop your brand reputation in other ways.

My advice is this:

Look at your own strengths (i.e. personality, quality, ethics, speed, etc), and consider “will a small slice of my market sector want it this way”. If the answer is maybe…go for it. Remember, a tiny percentage of most markets will make you a millionaire.