Pricing is one of the most discussed topics in the business. This is because putting a price on your product or services can be most times dependent on the market.
When starting a new brand, it can be tempting to use pricing incentives to win against your competitors. There is this wrong idea that “the more a business reduces its prices over its competitors, the more the business enjoy the market share”
But cutting down your prices can be a disaster and it can ruin your brand.
Several times, especially since COVID hits, I get emails like “My competitors are bringing down their prices. Should join them so I won’t lose clients?”
Whether you are a freelancer or an agency, competing on price often feels like a natural path to follow. It is always your first instinct in firing up sales! Humans always believe that dropping prices would attract more customers and boost the business.
BUT NEVER DO IT!
FACT: There’s Always Someone Who Will Do It Cheaper
Let’s say you sell a digital product for $1000 but your competitors are selling the same product for $500. Then you reduced your price to $400 to meet up with the market share and make more sales. You will still see hungry competitors who will sell the same product for $350, without considering the cost implications.
Whether You Reduce Your Price By 80%, There’s Always a Cheaper Option
The moment you start reducing your prices, not forgetting the cost of advertisements or marketing funnel, many prospects will still show up with lower competing offers.
Having a high price gives you a competitive advantage.
YES!
Now read carefully – if you offer more value (rather than being salesy), you can be are more expensive than the competition and create better “network effects” in your business.
P.S: ‘Network Effects’ occurs when a product or service gains additional value as more people use it.
But how does increasing one’s price bring about a network effect?
In a simple maths equation:
More Value = Better Results = Referrals (More Word of Mouth) = More Customers = More Win For Your Brand
Also,
Cheapest Price = Shittiest Types of Customers More Wasted Time on Changes = More Complaint = NEGATIVE Network Effects
Instead of joining the bandwagon idea of reducing your rates to nothing, focus on delivering the MOST value for money. Focus on getting your customers better results than the money they would have paid your competition.
When you are faster in delivering more values than what is expected, it’s always easier to operate the business with less effort. This will have your business producing more happy customers which will directly lead to a positive network effect for your brand.
I hope you find this little piece useful?
Look, a lot of businesses are suffering right now and most times it looks like price reduction is the saviour. But it’s not. There are smart and counterintuitive things you can do right now – to secure your business, your income, and your family.
Do you need someone to work with you in creating a brand strategy and disruptive marketing plan that will shoot your business to the next level and create a positive network effect for your brand? Reach out now! Let’s help your business connect with your audience, to give recognition in today’s noisy world.
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