So first off, let's address the issue at hand: Money
Why should I not focus on my pricing?
by Jimi Filipovski on Unsplash.
Lower prices gets more customers! There's no way I wouldn't make my pricing my big selling point!
Well let's talk about that.
When your price is your main selling point, you're an easy target. In most industries, it's easy for another provider to come along and deliver a similar (if not a little better or worse) offering than you bring to the market.
This is possible regardless of how cheap you get your materials or how low your profit margins are. It's business strategy, if your selling point is price and someone beats you on it, you're done.
You may be wondering, how can they possibly sell this offering lower than you do?
Well the truth is, not all businesses need to always be making a profit. If the game is price, and they can outlast you on lower pricing by breaking even, or operating at a loss, they'll win. Even if you're not out of the game, they would've taken significant enough marketshare from you to cause serious damage. In the aftermath they can always hike their prices, and as long as the premium isn't too high, you can bet a lot of people will still stay with their product.
So if not price, then what should you focus on?
The offering, or rather the value of the offering.
Let's say you're selling toilet paper, yes, toilet paper. There are plenty of cheap brands out there which people switch between very frequently, which quite frankly I don't even remember the names of. Most people will go for the cheapest one they see at the time and that can vary drastically.
But think of the brands that you do know. They charge a premium, like Charmin, Bounty or Cottonelle, and they stay in the market and they get high sales regardless of what's cheaper? Why is that?
It's because they compete on the offering and not the price. They offer high quality toilet papers at a premium and that's what makes them the big successes they are.
While I'm not saying you should charge an arm and a leg, you should definitely focus on creating a quality product to stay relevant in the market and build a reputation for yourself. Keep sales consistent and the possibility of growth open.
