Home Business Marketing: Should You Sell On Price?

No.

Really, you can stop reading right now and you’ll know all you need to know about this topic. If you would like me to beat you over the head with why you shouldn’t sell on price, please feel free to settle in. You may want to go get a coffee.

If the only way you can gain market share is by making your product or service cheap, your product or service sucks. Well, that or your marketing sucks but you probably don’t want to hire a marketing consultant because you think you can do it yourself. Fine. Do it yourself. You don’t need a marketing degree to market stuff. Just don’t market your stuff on price.

There are two problems with marketing your home business product or service as cheaper than others.

Loyalty. Customers who buy a product or service because it is the cheapest are not loyal. They will leave you like a high school girlfriend. They are the draft dodgers of shopping. You do not want them. Let them hide out in Canada. (If you’re new here, that’s funny because I’m Canadian.)

Remember the statistic? It costs eight gazillion times more money to get a new client than to retain an existing one? If your customers are always leaving, you’re always busting your ass to find new ones. This is not cool. The only way you could avoid having them leave is by being certain you can always, always, always be the cheapest. This leads us to problem number two.

Consistency. You can’t always be the cheapest. You just can’t. If you sell cheap pool cleaner, somebody might sell it cheaper. If you sell a lot of cheap pool cleaner, you can be damn sure somebody’s going to sell it cheaper. If they do this, you are screwed.

Or let’s say, for the sake of argument and because I like making ridiculous hypothetical statements, that nobody’s going to undercut you. This is the most implausible thing I’ve ever heard, but we’ll assume I’m wrong here. Let’s say you can always be the cheapest. Fine. You’re the cheapest. Nobody’s going to go lower than your price, you cheap slut, you. What if your supplier’s price goes up? Hey, look! You’re screwed again.

What if, after all of your marketing efforts, you have more customers than you know what to do with and you’re working every hour God sends for what amounts to nine bucks an hour? What if you decide that’s not exactly going to send your kids to college? Whoops-A-Daisy, you’re screwed once more.

Bottom line, selling on price is dumb.

But what if you have to sell on price?

Sometimes price has to be a motivator. Maybe you’re selling something really new and people don’t get it. Maybe you’re in a highly competitive market and you want to break in. Maybe you know your product kind of sucks and you can’t get away with selling it for more. Whatever.

If you must use price as a motivator, make it a side benefit, not your primary selling point. Everybody and their mother is talking about Teaching Sells, the new brain child of blogosphere wunderkinds Brian Clark and Tony Clark. Up until October 31st, they sold it for $97 without disclosing what the price would be after November 1st. They got over 800 people to sign up in something like two weeks. (It went up to $197, by the way.)

Were they selling you on the fact that it was only ninety seven bucks? No. We all know that properly implemented it’s worth far more than that. They were selling you on fear. You don’t know what the price is going up to. What if you can’t afford it when the price goes up? What if you can afford it but you feel like a moron for not getting in earlier? The actual price is pretty irrelevant.

Price-based motivation can also be dressed up as mitigation of risk. You know, the whole “try it for a month for only a dollar” thing. The customer doesn’t want to shell out thirty bucks for a subscription to something that is unknown and therefore might blow rocks. The product may be worth thirty bucks. The risk is probably not. The potential risk of dropping thirty bucks on something stupid is not outweighed by the possible benefits of what you’re offering.

High Risk = Low Conversion

If you want or need to slash your prices on something, sell not to their desire to save money but to their fear of risk. You don’t want your buyers buying because you’re incredibly cheap. Under these circumstances, you want them buying because they were thinking of buying anyway, and now you’ve eliminated the risk factor.

The first group of buyers are the “Attention: K-Mart shoppers” type. See “loyalty”, above.

The second group are money conscious. They’re not necessarily averse to your base price, they just might not want to give their credit card number to every yahoo with a merchant account.

Basically, don’t sell on price. It’s stupid.

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By Naomi Dunford