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How to Compete on Price | The Practicalities of Using Price in Competition

Posted On - 13/06/2013 21:28:46

How to compete on price: business or consumer, all purchasers buy on more than just price - other things matter hugely.Competing on price is easy – just sell cheap! It must be what customers want: price messages are everywhere. And it must be the right strategy because that's what everyone does. But just because that's what you see, doesn't mean it's all that's going on or that it's even right. Because, business or consumer, all purchasers buy on more than just price - other things matter hugely.

In ‘How to Sell Yourself, Your Worth and Value' knowledge and expertise are proven to matter so much in many situations, they can genuinely over-ride price. But how does that help? Price clearly matters – it can't be ignored. If competing on price isn't selling ‘low' then what is? That's what this blog is about.

First understand what you're dealing with then plan how to address it

Price's relationship with you, your customers, your prospects and competitors is complex, but not difficult. There are a number of things about it you have to really get. Because only then is it possible to formulate a strategy that will guide you to do the right things. And if you go about competing on price like this you'll be able to do so with a confidence unlike ever before. You'll know your plans are sensible and coherent, and you'll know how to select the right promotions rather than doing them ad-hoc.

Price competition fundamentals

Later in this blog I'll set out the key principles for competing on price. These can be used to spell out your strategy – the detail of what you'll actually do. But before I do that I'm going to recap some of the critical issues about pricing. I'm going to spell out the complexities surrounding price and pricing and to make sure you have a solid understanding of what matters. This means you'll have a clear sense of what you're dealing with. More it'll ensure any principles you define address the right issues.

1.    Customers don't want 'cheapest', they want value-for-money

Business or consumer, when anyone buys anything they're looking for value-for-money. The problem with ‘cheap' is what does it buy? Value-for-money is more than just about quality, it's about the whole value of your worth. If the guy down the road sells more expensive than you, but has a shoddy shop and isn't properly qualified for the work he does, should you remain cheaper to be price competitive? Should you even be the same? There's absolutely no reason to price low at all. Pricing should give customers the confidence you are value-for-money. You have to be clear on what that value is.

2.    If customers complain about the price it's likely they don't understand the value

Not everyone knows the same things about stuff or sees everything the same way. Providing your pricing is reasonable – that you're comfortable your prices represent your whole value – customer objections don't have to mean your prices are wrong. It could just mean they don't yet see the value you do.

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