It’s very easy in today’s financial climate to reduce your prices and in turn your margin to compete on price with your competitors. But, cutting prices isn’t always the best policy - instead look around at what you can do differently to make your business more attractive to your customers. Most of the time cheap isn’t always best, and some people will be put off by this.
One method of attracting new business without compromising your margin is to offer extra value to your customers, this could be an extra level of service, a cheap add-on to their purchase or something or low value to you but high perceived value to your customer.
As a web and graphic designer i’m always up against companies with lower overheads or people offering their services as a hobby - to earn some extra spare cash. So instead of coming down and offering my professional services at bargain basement prices I try and offer a little extra value for money. Recently a web design job came up, and the pressure was on to meet a certain price, I knew that if I did meet it my margin would suffer so instead of turning down the job I offered the client a years free hosting on my reseller account. This effectively cost me nothing but the client saved a few pounds and I got the job!
Of course, offering extra value can apply in any industry - but the golden rule is always charge what you’re worth - not what you’re customers are telling you you’re worth. Under pressure it can be easy to cave in and knock money off a job or product to get the sale, but longer term you’re doing your business more harm as you’ll struggle to get your clients to make the market rates for your services in the future. They will forever remain a bargain basement client.
It’s understandable that clients want to get the very best price for the service or product they require, but you’ll find that by charging a fair price you’ll actually produce a better level of service or product. But if you do find you’re in a situation where you need to offer a little extra value to your customer then look around at what you can offer that will minimise the impact on your bottom line.