On Being Cheaper

Strategy

Cheaper is easy in the short term. Easy to advertise, differentiate, compete. “We’re Cheaper!” says the ad, website or proposal.

Cheaper works really well for retail. Walmart was built on it. But retail chains and websites have an advantage that professional services don’t: They can sell in volume.

Sell 2,137,211 doggie chew toys through your blog at a 3% margin, and you’re probably making some money.

Provide legal services, consulting or training at a 3% margin, and you’re making minimum wage.

Worse still, cheaper as a strategy fails because you can never be cheap enough. There will always be people who just do it themselves, or don’t do anything at all, or hire someone willing to work for less money to build experience. When you advertise on price, you are appealing to the exact clients you don’t want…the ones who will bail on you the second they don’t feel like spending more money or can find someone else to do it cheaper or for free.

Better to charge a premium. You’ll appeal to fewer clients, sure. But you’ll be able to focus on creating outstanding results for the clients you do get, make more money for both yourself and them, and position yourself as the only solution worth considering. Let everyone else fight over the scraps.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s