March 2016 Foreword: Way Too Cheap
“My competition’s pricing is so cheap!”
“I can’t believe how little they charge for cleaning.”
“I saw one of their estimates. It was about three cents per square foot. How can I compete with that?”
Perhaps you have had similar sentiments or have made outright statements about the pricing practices of your competition. When a competitor of yours charges a fraction of what you charge, you have to wonder how and why they do it.
A few reasons come to mind:
- Their cost of doing business is much lower than yours, and when they charge less, they are still making money.
- They are desperate, just want more jobs and — most likely — will soon be out of business.
Speaking to point #1, controlling costs is a smart business move. We all work hard to reduce expenses, and it’s nice when we pay less for typical costs of running a company. Yet, when you are able to keep your costs of doing business low, don’t succumb to the knee-jerk reaction of lowering your prices just to get more jobs and keep busy.
As to point #2, this is a typical move by new companies who come into the industry but are soon heading out. You have seen start-up companies come and go; it happens all the time, and, yes, they do take a few of your customers. There’s not much you can do to compete with them on price. What you can compete on is quality.
If you think pricing is the most important way to get more customers and jobs, I challenge you to rethink your pricing strategy. The very best customers, the ones you covet, do care about price, but more importantly, they care about quality.
As a consumer, what you really want is quality — and a little convenience doesn’t hurt — at a fair price. So, do your company a favor and give that to your customers. You will find price doesn’t really matter… well, not too much.
Jeff Cross is the executive editor of Cleanfax and is an industry trainer and consultant. He can be reached via email at [email protected].