Is it best to be the cheapest or to be the best?
If you type in the word “cheapest” into any search engine you will be presented with millions or results of web pages vying for position as the cheapest flights, cheapest Disney tickets, cheapest hotels etc.
Is it good to run your business as being the “Cheapest service”? Well I personally don’t think so, but there seems to be a huge market out there for this.
The problem with competing on price is that if you are not cheaper than your next rival then you have no place to go other than to go yet cheaper still and so on.
Alternatively, if you compete on quality or the best service then so long as you deliver an outstanding service and/or quality products and services then customers will not only return to you, but they will also recommend business your way too.
Just food for thought for those business owners out there with the age old dilemma of trying to compete with the other businesses in your sector or in your street.
I will give you an example of how not being the cheapest can work from experience on one of my businesses.
Our assessor went to see a potential new client who were considering 4 other companies in addition to ours. We were well prepared and we showed that our set up was obviously much better than our competitors – the reason I know this is because we got the job and we were some £100 per week more expensive that the rest – these people were prepared to pay an extra £5,200 per annum more to get a professional quality service.
So providing the cheapest prices is not always the best in business.
I think that is basic dilemma with all companies. Companies that don’t have the resources to direct into anything else than price should be the ‘cheapest’. All other should try to give the best compromise between the price and the quality.
I do agree Ed, because a number of the ‘low’ cost businesses have made good money in this recession, so good point.
Hi Zac – you have a good point there and yes when times are tough it is extremely tempting to reduce prices…however, if you run a business it is worth taking a look at the Profit Increase Software, as this will show you many ways to increase your business profits, some of which will not cost the earth!
People will always get hung up on trying to find the best deal, especially in times such as this, look at the retailer poundland for example who have expanded their business successfully during the recession. However despite the demand for cheap products, many people still demand quality and dont mind paying that little bit extra for it!
.-= Business News Ed´s last blog ..WPP effected by the recession? =-.
I’ve always believed in trying to deliver the best service at a reasonable cost. However when times are hard it can be tempting to try and compete on price. If your business is based on your quality of service, you will almost certainly fail if you try to switch to competing on price without proper planing.
.-= Zac – Self Build Mortgages´s last blog ..How much will my self build cost? =-.