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Price Competition and How to Do It WELL

Posted On - 15/01/2014 08:46:01

Learn to play 'Price'
Price competition is a game. It's played between you and your competitors. If you win you get peoples trust and custom. So it's something you don't just have to learn, you need to get good at it.

Being really good at Price means more than just turning up and playing. You need to understand the rules and how to game-plan.

In this blog video we're going to look at the rules of Price and what they mean. And we're going to start a discussion on Price Strategy that will continue through this series into the next. Let's take a look at some of the key points here.

You can't sell expert service cheap eitherLike all games Price has rules. You can play by them or break them.

But if fail to understand them, or worse foul, you will cause material problems for your business.

You'll find trading harder than it should be. Income less than it could be. Profits lower than they need to be.

Because Price is a game of influence. If you say the wrong thing about your prices or something that can be interpreted the wrong way, you put your business reputation on the line. And dodgy reputations take a long time to shed.

Price positions you relative to other businesses. It determines how much profit you'll make. It sets expectations about you and your business. Perhaps because Price plays so many roles we get to see it being used poorly. The number on the tag isn't just a cost, it's a value. And that's something we see many businesses misunderstanding.

Don't get value? Just go to an auction to see it in actionValue exists. It's alive and kicking. Go to an auction and it'll meet you at the door. Watch how bidders drop out as the price of what they're bidding for goes up.

How people decide the price has become too much. That the price being asked has become greater than their perception of its value – of what it's worth.

Value exists alright. And one of the rules of Price is that different people can value the same thing differently. And that the same price says different things depending on what matters to you.

But value goes further than this. There's an old adage concerning good, cheap or fast service – we talk about it in the video. This natty little saying explains a simple truth: customers know there's a cost to price. They know price and quality are related.

Price questions don't have to mean yours is wrong. That only the lowest possible price is acceptable. Customers don't want inferior stuff and they don't want to over-pay either. They want - and are entitled - to know they're paying a fair price for what they're buying. More Price rules.

Mixed messages scare customers offHere's another Price rule: if your price doesn't add up with your image and reputation, you'll scare customers off.

It's vital you know what your value is and can explain, articulate and show it plainly through how you present your business.

This goes beyond the niceties of having a clean, well laid out shop; an enticing range of products and services; polite knowledgeable assuring service; and professional looking window displays and websites. It includes everything that's seen and said about you everywhere. Because to master Price, you have to be able to play it with people you've never even met.

The Big Guys may call the shots, but taking them on is easier than you thinkIf there are rules to Price there are also leagues. And like the Premier league, the Price game the Big Guys play is the one that gets the attention. After all, they're the ones able to fund large scale, price led, headline grabbing media promotions.

Combine this with assumptions that big means cheaper and you can see why people, despite our research to the contrary, might consider you uncompetitive.

Playing in the Big Guys league may seem something beyond you. It isn't. Because when it comes to form they're the ones with the handicaps. What's more they're things they can't do anything about. Because they're not small, local, independent, expert, businesses. And they are unable to do anything when you point these things out to people.

Like to know more about how to ‘do' Price WELL? Just take a look at the video.

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