In this difficult economy everybody is looking for a bargain. That’s why we have to seriously entertain reducing our prices in order to compete effectively. Right?
WRONG! We fall for it every time.
If you are a finding that you clients are putting more and more pressure on your firm to reduce prices then it’s about time you change your clients! That’s right often times price erosion is not so much a problem with your pricing strategy or product selection or service but rather your customer profile.
Continually reducing our price is like prostitution. WE can never become cheap enough. In fact the cheaper we get, the less valuable we are perceived.
I encourage you to look at your customer pool and begin to segment them not so much by demography or psychographics but by “value perception.” Do you understand why those specific customers are “willing to pay more?” What is it that they value that the “price-oriented” customer do NOT value? Why? Then you can create a NEW customer profile and focus on those clients that find great value in your product or service. Perhaps you can even discover a way to create evangelists who trumpet this value claim.
I encourage you to check out this brief video of a seminar where I discuss price sensitivity and what you can do about it.