Edmonton Business Coach | Lowering The Price Is Not The Answer
Hi there! Welcome back to the Inspired Method YouTube channel where you’re Edmonton business coaches, Trevor and Karen Samons, and today’s topic is lowering price is not the answer.
Here’s a quote from Zig Ziglar, one of my favorites. It is unwise to pay too little. When you paid too much, you lose the little money. That is all. When you pay too little, you sometimes lose everything because the thing you bought was incapable of doing what it was bought to do. The common law of business ballots prohibits paying a little and getting a lot. So true.
Here’s a quick statistic and we want to share with you and it’s something that keeps us going day in and day out. 50% of all Canadian businesses will go out of business in the first five years and 29% of these failed businesses will list running out of cash as the main reason for their failure making, running out of cash or the second most common reason for business failure.
That is huge. So, here’s a quick story. Business owners think that price is the thing that customers value the most. I’ve seen this so many times with different businesses as it, as an Edmonton business coach, we’ve talked to people and we say, what do you want to do? I want to be the cheapest out there. I can outbid anybody else in the marketplace and that’s going to make me, when I spoke with a guy last week who was looking for an Edmonton business coach, and his thing was, I am the cheapest. Okay, then you’re going to go out of business first is what I told him and he was kind of shocked. He was like, what? What? What? I’m like, people don’t just buy on price and we’re going to talk more about that. So what are some of the questions we have Karen for this video?
So why do you like to talk to what the Nissan versa? Because it is such an amazing car. It is just the best. No, I’m kidding. I’m kidding. The Nissan versa is the lowest cost of ownership car on the market today and actually has been for several years now. If price was the only reason people bought a car, everyone would be driving a Nissan versa. So there’s that. But do you drive a Nissan versa? I saw my first one yesterday. I said, yeah, I saw one the other day. They are a very small little car. They, they look inexpensive, cheap and I could not buy that car for me and my family and we just have different needs. So, because you have different needs and your customers have different needs, price is not the main factor.
Good example of how prices, not number one personal preference. People like to feel special. They like to have status, prestige and we all have different tastes, right? And because we have the ability to purchase what we want it’s all over the map. So people will usually go to the, the, the higher end of their personal budget or their personal preference when they’re buying clothes. Now think about this, Edmonton business coach. Your cell phone. Even if you can’t afford Rice-a-Roni, I guarantee you probably have a either an iPhone or a Samsung galaxy or you’ve got some kind of a fancy phone, but I guarantee you the type of phone and budget was not the contributing factor. Otherwise you would have a flip phone with maybe a camera on it and maybe be able to, to send or receive an email. That’s about it.
You would not have a fancy phone with all these apps and games in widgets and all the things that come with a smartphone. Do we even make calls on our phones anymore, Edmonton business coach?
Like, no. I know I just talking to a guy not long ago who was homeless sleeping on couches, but yet a cell phone with a plan. Right. We’re not giving up those phones. No.
Edmonton business coach, what difficult facts do business owners who can only sell on price have to face?
The difficult fact that these business owners have to face is if you are wanting to be the low price offering in your market, there’s always going to be someone who’s lower. There will always be someone who is wanting to be the lowest priced option for whatever it is that’s going on out there. And you need to come to terms with that. You need to price yourself based on value and then over deliver so that you can demand that price. This is the advice I give my Edmonton business coach clients.
Right. That’s one thing you need to do. If you continue to sell on price, will you have to cut corners on time and products? You know, I’ve seen it so many times in construction, um, people who come in, Oh yeah, we got the bid where the lowest price. So many times I’ve seen, I have seen bad things happen when somebody won based on price because they don’t show up on time. They don’t, they’re committed to the job. A lot of times they run out of money halfway through and they have to abandon the job and you never see them again.
Then the general contractor has to find somebody else to pick up the slack and it usually costs them more because they went for the lowest price offer. That is a sure way to fail and go out of business faster than anybody else is to be the lowest price option.
You don’t want a headache too, right? Stress. Yeah. Yeah. If you continue to sell on price, will you be able to afford team members? That’s pretty self explanatory, Edmonton business coach. If you don’t make enough money to even pay yourself, how are you going to pay for good quality people? You’re not going to be able to, it’s just a fact of life. You know, a good business with good people requires a certain level of revenue to be generated. And if you don’t do that, then you are going to have low quality people who may or may not show up on time, may or may not even show up at all. They might steal from you. They might, you know, talk rudely to your customers, maybe even steal from your customers. You don’t know. Um, if you’re not able to pay the right people the right price, you’re not going to, you’re not going to be able to survive. Yeah. Just the way it is.
Here’s another question, Edmonton business coach. Are customers who only value price, generally bad customers?
Typically people who are really tight with their finances. We’ll say cheap and always looking for the bargain are typically your biggest pain in the butt customer because they’ll want everything for nothing. They expect the most, pay the least and they give you the most headaches.
Now if you want to be the lowest price offering in the market, then those are the kinds of customers you are going to deal with. It’s just the facts of life. I’ve seen it over and over again as an Edmonton business coach and that is just a fact of life. The people who pay the least are the biggest pains in the butt.
Do people value features and functionality? Yes, absolutely. For example, we had the privilege of using a Volvo for a month.
It was great. Thank you so much. Volvo Edmonton for allowing us to use that vehicle for a month. It was great. Like there is all the different accoutrements, the bells and whistles, the touchscreens, the climate control, the, the automatically adjusting, suspension, moon roof, all of these great things. And you know what? We would love to have that in a new vehicle. Why? Because it makes driving more enjoyable. It makes even getting in there make you feel a little bit more special going in. When you put on a nice set of clothes, you feel better, you stand up straighter, right? You look in the mirror and I’m like, Oh Dang, I look pretty good. Right? And it makes you feel better when and when you’ve got better features, functionality and stuff on your products and services that you buy. Right Edmonton business coach? And you feel good. Like when you buy that iPhone or that Samsung or, or whatever phone you’ve got, you’re like, man, I’ve got, I’ve got a good quality item here.
This thing’s going to last me a long time. It feels good. I feel a sense of pride, of ownership, of having it. So, it just goes without saying, but I’ve said a lot, if that makes sense.
Do people value reputation, Edmonton business coach?
Yes. Reputation matters. Reputation is almost a currency, especially with when it comes to social media. Because your reputation, even though can take a lifetime to build, can be destroyed in minutes. That’s why reviews are so very important for you to get for your business. Good. Five star reviews as many as possible because then when that one hater comes along and they want to try and sabotage you or you get an angry employee or someone you fired wanting to try and you know, ruin your reputation, then you’ve got a lot in the tank in order to combat that. So take it from an Edmonton business coach. Reputation is huge.
Do people value speed and convenience?
I tell you what, I’ve never seen a slow McDonald’s drive through, right? Make everyone happy, right? There are slow McDonald’s, but the ones that are not don’t make customers very happy. Generally, they want to move people through nice and fast rate. People like speed and convenience, they like getting in and out done because we go on and get onto something else in our lives. Right? We don’t want to just be waiting in line all day just because we love to wait in line in our cars. Even though we might have a nice car like a Volvo, we don’t want to sit in it all day in line. It’s customer experience. Likely the most underestimated consideration I see as an Edmonton business coach. Customer experience. For us being in the business, we’re in, being in marketing and business coaching, it’s huge. Customer experience is paramount and I am one who will point out when it’s being done right.
And I’ll also point out when it’s not up to par because I want to give credit where credit’s due and if I can help the management or help somebody along the way and say, Hey, you know what? This is our experience could have done this better than at least I’m doing my best to help provide a solution for your customer service product. Yeah. So yeah, customer services is massive. Well, thanks so much for joining us here today on the Inspired Method Marketing Edmonton business coach channel. Don’t forget to subscribe like the video comment and we’ll see you guys on the next video.