Price Wars - Low Ballers Die of Natural Causes

It is always frustrating when a new company opens up in town and starts low-balling everyone else to try to gain business. It really tends to diminish the value of products and services offered by area competitors.  It would be nice if all the competitors in an operating area could get together and fix the bottom line price point of a particular service or product.  However, the federal government refers to these practices as “collusion” or “price-fixing” and other nasty terms that violate anti-trust laws.

There are ways to combat this, but, the point is, we shouldn’t have to. When people call and ask if you will match someone’s price, the reply should be, “It depends on what company we are matching.”  For instance, there are many hotel/motel companies operating in the world but a comparison shows they are not at all equal in their product delivery.

You might reply, “You and I will both agree that you can’t call the Ritz-Carlton and ask them to match the price of Motel 6 right?  We probably would also both agree that we know what the expectations are for a Motel 6”. They will leave the light on for you, provide a functional bed, a television, some plastic cups in the restroom with some cheap soap and some of the thinnest towels known to mankind.”  By contrast, your experience at a Ritz-Carlton would be different from the moment of arrival.  Ritz-Carlton employees go through mandatory training on delivering impeccable customer service and Motel 6 employees probably go through very little formal training.

This analogy provides an opportunity to share information about why your company commands a higher price.  It could be service, the type of equipment used or even efforts to go green.  You can share how important customer satisfaction is as well as employee safety.  You can explain that you are never going to have the lowest prices in town because you can’t be the best by charging the least. You might also say that some people prefer Motel 6 for the budget savings while some demand nothing but the best and that is why they stay at the Ritz-Carlton. Don’t be bashful about saying that you consider yourself to be the Hilton of your local industry. 

The great thing about low-ballers is they usually end up killing their own business. You cannot charge below market value and save enough to replace equipment or supplies, maintain facilities and pay for quality help by low-balling pricing.  Hold your prices, bide your time and watch them die off when they run out of money to keep going while you smile on your way to the bank.

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Price Wars - Low Ballers Die of Natural Causes

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