The Business Bulletin
To be or not to be competitive Used in the context of business, the word “competitive” takes on a different meaning to what you’d normally expect. When a business or a customer uses the word “competitive” they’re referring to low or cheap prices.
“Competitive” should be about the
needs of the customer in the same
lots of customers thank you very
ability to deliver better value or a
way. All these things make us unique
much.
better performance to your customers
and different to our competitors.
than your competitors and not about a better price and yet many
So why do we feel the need to be
Yes, it’s true we all like a bargain and don’t like being overcharged
competitive? Is it because we believe
but there are many examples of us
that the only way to win customers
being prepared to pay a lot more
is by charging the same as (or, even
for something we value. If we were
worse, less than) our competitors.
only driven by price, why would any
in your pricing and does it make it
Or that price is the priority for every
of us buy an iPhone or a BMW or a
easier to win customers? Who does
customer? Or that low prices attract
Fitbit when there are much cheaper
it benefit the most? The customer or
lots of new customers and lead to
alternatives that do the job just as
ourselves as the service provider? And
a higher volume of sales that in
well? It shows there is not always logic
can we win customers without being
turn leads to higher profits? Given
to what we buy and that price is not
competitive?
how often the word “competitive” is
always the deciding factor.
businesses promote competitive pricing as a USP. So is it good to be “competitive”
attached to a low price structure you
Is it a competition? I would argue that it isn’t. Whether we’re a website designer, an
have to assume that we do. Or at least believe that our customers do.
Higher volume of sales at a low price increases your workload with no guarantee whatsoever of it increasing your profits. If you really want to
media expert, a butcher, a baker,
So what’s wrong with these beliefs?
a candlestick maker or any other
Well, to start with, 85% of SMEs
profession for that matter, none of us
undercharge for their services. That
work in exactly the same way or end
means all you’re doing is helping to
up with exactly the same result as our
further drive down the price. If you
fellow service providers. No matter
were to take the time to do some
attracted to you because of your low
how crowded our marketplace is we
market research, you would find that
price will likely end up more time-
don’t have the same qualifications,
of the other 15% there are some SMEs
consuming and a pain to work with
experience, qualities, approach, ethos
charging eye-watering sums of money
than those that appreciate your value
or the same connection with the
for arguably no better results and
and are prepared to pay more. Is that
customer nor do we interpret the
they’re still winning (and retaining!)
the type you want to attract?
accountant, a business coach, a social
24 | Issue 9 – Finance
guarantee an increase in profits then it would be much better to increase your price rather than lower it with the added benefit that it would reduce rather than increase your workload. Frankly customers that are
