How can you maximize profits when everyone is racing to the bottom of the pricing scale? Consider the value you can offer beyond quality, service, and price.
This winter has been really tough on almost all the companies I know in this industry. With very few exceptions, business is down, and pressure to lower prices is much higher. Competitors are going to ridiculous lengths to win work. But I wouldn’t exactly call it winning. Margins have been stripped to the bone, and many companies are just barely covering actual operating costs. The logic is driven by desperation: If they can just hold out until spring, things will get better. With all the indicators, that may be an optimistic hope.
Watching the industry forums, the discussion is all about pricing and how low it’s going. There’s plenty of talk of commodity pricing and the lack of differentiation in the marketplace. Customers just don’t seem to get it. All they want is cheap, cheap, cheap. I’ve read many arguments, but found few substantive suggestions concerning pricing. The most common ones center on the old quality/service/price formula. The saying goes, “You can have two out of the three. Take your pick.” Sadly, if you expect to have any chance, you need all three and then some.
This month I would like to take a serious look at what you can do to increase your business and maintain your price—all the while keeping your clients happy and satisfied. How is this possible? The key lies in how you look at the market and your customer base. The majority of pricing-related problems come from looking at the situation from the wrong perspective.
While your customers think they want the absolute rock-bottom price, they really don’t. Their main concern is really about reliability and performance within their use of your products. Their efforts to have it all are more of an expected behavior than a reality. Now, I’m sure such a statement is raising the eyebrows of many of you right now. I can almost hear the phone ringing off the hook with printers protesting: “You don’t know what it’s like out there right now,” and such. Believe me, I do.
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