Does this sound familiar? Over only 12 months, a leading DNA testing company
has dropped its prices by 15 per cent. New and less experienced competition is
swarming their market.
Advertising costs have increased. Demand has decreased. And for the business
owner, the concept of having cash in the bank feels like a pot of gold at the end of
Of course, most of these new competitors won’t be around a year from now. Most of them have ZERO experience or results to back up their claims. But that doesn’t reduce the devastating short-term and long-term effects they have on your profit margins.
Here are two pricing strategies for protecting your profits when inexperienced and unwelcome competitors appear:
1. Be the Cause
If you don’t like dropping your prices because your competitors are, drop your prices so your competition has to. Proactively search out ways to reduce your operational costs. optimise your sales processes and your website. Then, slash your prices. Going for volume has it’s own challenges, but over time, your market will be a lot less appealing to competition. You can then increase your prices or settle with doing large volumes for large amounts of money.
2. Be the Rebel
You don’ t have to drop prices because your competition is. Every industry needs “luxury brands” — make your company one. Increase the value of your products or services by conducting market surveys to see what those with the most money want. Rigorously increase the quality of your products and services, and pay a little extra for your logo, website, and marketing pieces. Then target those who want your services and can pay top dollar. You’ ll get fewer sales, but they will be more valuable sales. You’ ll bring in more revenue, and your overhead should be less. There’s no right or wrong answer here, but you must be either proactive or intentional. You must proactively drop prices and drive volume. Or, intentionally price yourself high and build serious value for your potential customers.
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