With everybody looking for the next deal, it may make sense to lower your price to reach a wider variety of people – but this could prove harmful in ways that you hadn’t considered. Your pricing strategy is an important part of your brand and tells clients and prospective clients more about your company than you might think.
The quality of your service or product
Have you ever heard the saying “you get what you pay for”? It’s an important part of the consumer mindset that is built into our thinking. Lower prices mean lower quality. Consumers are less likely to trust your product if they feel as though your price is too low. In fact, according to a study conducted in 2007, price directly affects the level of service quality your consumer expects.
You may be thinking, that’s good, right? If I charge less and lower my customers’ expectations, then they will be delightfully surprised when I exceed their expectations. This, however, rarely works out as expected. Not only do you need the customer to give you a chance in the first place, you also need to ensure that you are charging enough to be able to afford that superior quality service you expect to provide.
Your ability to provide service
Imagine for a minute that you are a photographer. All photographers in the area are charging $300 per session. You think to yourself “Well, I can survive by charging only $150 per session.” You may be right, you probably could survive charging that much. However, you’ve now left people wondering why your service is so much cheaper than your competitors’. They may not trust in your ability to capture an important moment in their lives.
People are willing to pay for quality. We see that across all industries – don’t sell yourself short, literally.
In fact, it is almost a self-fulfilling prophecy. Although you may have been able to provide quality service despite your price, you now have to take on more clients to make up the difference – limiting your ability to provide quality service.
Your business ethics
This one may have you shaking your head a bit. How in the world can offering a lower price tell customers about your business ethics? Well, it’s actually pretty simple, offering a price that is too far below your comparable competitors’ is often seen as a deliberate attempt to undercut their business. You do not want to align your business with the notion of deliberately destroying someone’s livelihood. Consumers do not want to feel as though they are supporting the villain in the story.
As you can see, your pricing strategy is so much more than just a numbers game. You have to take into account how your price will affect the impression your potential clients have of you. Everyone may love a bargain, but at what price?
DISCLAIMER: This article expresses my own ideas and opinions. Any information I have shared are from sources that I believe to be reliable and accurate. I did not receive any financial compensation in writing this post, nor do I own any shares in any company I’ve mentioned. I encourage any reader to do their own diligent research first before making any investment decisions.
How to advocate for the work life you want after COVID-19
The work from home policies caused by the COVID-19 pandemic have shown some companies that they can fully function without...
Crowdfunding seen as an innovative post-crisis financing mechanism in Tunisia
Countries around the world are struggling to find new ways to revive their economies deeply affected by the COVID-19 health...
Why the Fintech sector in Italy has to be further developed
The annual update of the continuous monitoring of the FinTech innovation ecosystem in Italy, the result of the three-year collaboration...
Beyond gaming: how real-life applications put virtual reality and Zadar Ventures Ltd. into the spotlight
Virtual reality has helped us find a way to get around the challenges of doing almost everything remotely. Zadar Ventures...
The Monero software update is ready to be used by miners
The Monero protocol update, also called Nitrogen Nebula, was announced on the Monero blog on May 23rd. The integration of...
Featured6 days ago
The Italian cryptocurrency exchange Young opens its second financing round
Business7 days ago
How to evolve your business model as times change
Business2 days ago
Why Inca One’s online bullion store is a game changer for resource investors
Featured5 days ago
The turmoil in the stock markets continues