Pricing Strategies: Tread lightly
It’s no secret that many companies have encountered a very challenging – even toxic – selling environment in recent years. Unlike anything experienced since the 1930s, this economic slowdown has been unparalleled in its scope, reaching into every corner of the market.
In such an atmosphere, the temptation to lower prices can be powerful. But while discounting may seem to be the “simplest, easiest” remedy to increase business activity, it is fraught with danger. In addition to the loss of margins caused by lowering prices, there’s also the risk that it can condition buyers to expect lower prices even when times get better.
So if considering a change in your pricing, take a hard look at your competitive environment first. Are cheaper substitutes available? How good are they in relation to what you offer? Or are you in a stronger position because of your ability to provide better quality, better delivery or better service?
It may be that developing a selection of “good/better/best” offerings allows you to appeal to different pricing needs without running the risk of diminishing the perceived value of your flagship products or services.