How many of us have ever been in a situation where we really wanted to make the purchase but we were NOT totally sold on if we really needed, wanted, or could afford the item in question?
And then, in an instant, the unthinkable happens… “How much can you afford?”the merchant utters.
This causes things to become much more interesting - since on one-end, you’d probably feel as if the merchant were doing you a favor by being willing to bargain; however on the other-hand, a small part of you can’t help but to question the validity of their pricing structure; which is a problem, in and-of itself.
Business Owners, for all intents and purposes, I’ve highlighted when it is acceptable to temporarily lower your prices. (I.e. Promotional offers, Counter-offers and Prelaunch discounts.) May I also add, that hindsight is always 20-20? Therefore, if you have been an offender of what I’m about to outline below, forgive yourself in advanced and GROWBEYOND, despite this common merchant oversight.
Let me first begin by stating that as a Business Owner, I myself HAVE in fact used this bargaining technique in offering my very own services and programs, not realizing its un-intended adverse impact.
In fact, reducing the initial offer, is quite common across the small business sector footprint since many see this as a form of negotiation-tactics that show the willingness to be competitive, or does it?
This is what I too, used to believe, until one day I casually overheard a customer’s perspective on this, who happened to mention how a competitor of ours, offered him a franchise opportunity and promptly lowered their prices as a secondary recourse when he didn’t initially accept. This apparently sent up all types of red flags to him, as a potential customer. Having once been guilty of the same act, I recall swallowing intently and raising my eyebrows, as I took mental notes.
He went on to describe in greater detail, how this experience forever tainted the image of the company in question. It also helped me to inadvertently reconsider my approach on this same topic.
With that said, I’ve since researched, tested and polled the perspectives' of ideal clients and below is the synopsis of my study.
5 Reasons why BUSINESS OWNERS shouldn’t lower their prices after they’ve made an initial offer
1.) Cheapens the value of your offer- Quickly reducing your price, immediately after the fact and without customer inquiry, rebuttal or counter-proposal, makes the customer believe your offer was never worth the original value to begin with.
2.) Appears desperate for sales- Your customers can smell desperation a mile away and it’s not a very favorable outlook for your business. No one trusts desperation, since desperate people do desperate things.
3.) Negotiable Value- Despite the fact that the worth can be negotiated, the value should never be questioned. Value should always stand, even when the worth is in question. We teach our GrowGetters that Value is derived by the owner while worth is determined by the consumer. Value vs. worth.
4.) Scrutinizes the integrity of your pricing criteria- Your customers want to feel as if some sense of scientific data or reasoning went into carving out the prices presented. (I.e. Time, materials, experience, etc.) Despite the fact that they aren’t as picky on what metrics were used, there is a subtle-solace in knowing there was a process used to determine pricing. The moment you change the price on the spot, you immediately de-edify your pricing criteria, creating additional lingering scrutiny around everything else. Perception is reality and how you do anything, is how you do everything.
5.) Reputational damage- When prices, policies and processes are subject to change (without merit), on the drop of a dime, they become volatile, unrestricted and unregulated, lending itself to errors, risks, losses and mixed messages that cause reputational damage. Reputational damage can occur when the customer feels that he/she would have been willing to pay the original asking price, yet realizes that someone else, who perhaps wasn’t willing to pay original price, would have been offered a reduced rate, while they were charged the originally set price. This creates a“rip-off” aspect creating distrust. Reputational damage can almost be irrecoverable.
In Business, you've work too hard to inadvertently fall victim to these setbacks when trying to “help” your customer afford your products or services therefore it’s important that we approach our offers from a broad based perspective. Ultimately, the owner states the value, while your customers must recognize the worth for themselves. You can’t force the worth therefore, stand by your value!
If this was helpful, please add your comments and or share this with your business counterparts and get more of the #THINKLIKEAGROWGETTER strategic mindset to success strategies by attending our October 15, 2016 Business Summit or visiting our website. As one of the fastest growing strategic planning development firms, we are always looking to partner with business owners to GROW them from what’s POSSIBLE to what's PROFITABLE!
