Richard A. Lindsey, CPA Lindsey & Waldo, LLC – Certified Public Accountants
  • Avoid the Wal-Mart Trap

    May 16

    “Do what you fear most and you control fear.” -Tom Hopkins

    The week of April 15th was pretty tumultuous for the country — the marathon bombings, the Boston lockdown, North Korea, ricin mailers, etc. — almost such that some didn’t notice that gold markets and the Dow both took quite a fall that week, as well (which doesn’t usually happen together).

    So, it’s fair to say that there is still a lot of fear on Main Street.

    And I must say that I believe too many small businesses are responding to this fear by giving in.

    I’ve addressed pricing before, but I thought I’d take the time to go after it with a different spin, and encourage my clients and business owner friends to not join the madding crowd…

    A normal conversation with my small business accounting clients — how to price their services. You see, often, we might hear consumers say, “Well I would buy it if it were in my price range.”

    And that idea tempts many business owners to lower their prices — just to sell more products.

    However, as you already know, price reductions sometimes create more problems than they solve. And they’re extremely tempting during a recessionary cycle.

    But you should know what price reductions can do to you. They…

    * Decrease net profits
    * Lead to the purchase of lower quality products
    * Increase customer demands to drop the price even lower!
    * Require even more sales to make up the difference in revenue
    * Need a larger quantity of products
    * Negatively impact customers’ perceived value of the products
    * Make it more difficult to raise prices back up later

    And, in the end, as John Jantsch (author of Duct Tape Marketing) says, “There will always be someone willing to go out of business faster than you.”

    Remember this: price is not a benefit. The close of a sale is not determined on the cost of your product. If you truly “sell” your customers and prospects, they will purchase your products/services no matter what price you determine.

    That’s the plain truth — and you’ve probably seen it in action, even in your own purchasing patterns.

    If a customer or prospect doesn’t buy–and they claim the cost had something to do with it–you can guess they probably wouldn’t have purchased anyway.

    As a small business owner, and marketer, your job is to sell your products and services. But, the actual art of selling has nothing to do with the price of the product.

    By the time your contacts find out about the price, they should be determined to purchase no matter what the cost.

    So, find “real” benefits (value) to sell to your customers and prospects. Help them to see how great their life is with your product, and you’ve got a customer. Point out their current pain, and your contact will do anything to get rid of it.

    Set your prices and hold fast. If you’ve marketed correctly, you will still have customers anxious to do business with you!

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