Giving in to the temptation to simply discount products and services in competitive environments can erode your profit and ultimately your brand.
I say look for ways to add value to your products and services before you ever consider lowering your prices. I’ve written more on this, including some examples at my home on the AMEX OpenForum blog.
I find that often times you can simple explain your services in a different way that will relate to the client in a new way and it seems like a new or better service to them, but its really just your same services.
Since we spend so much time talking about our trade we naturally gloss over some of the smaller parts that would be exciting to clients.
Explaining the aspects of your services can almost seem like a discount to someone who wasn’t 100% aware of everything you were doing for them.
I completely agree that discounting is a flawed approach in a competitive environment, and can erode the foundation of your business.
There are so many ways to add value, instead. The most important thing is to figure out how to solve your customers’ problems more effectively, or how to help them achieve their objectives more easily.
For example, if you an accountant for small businesses, instead of just offering basic accounting services, add in a bit of strategic business advice or a special benchmarking analysis. I would recommend keeping the value-add highly relevant to your customers and avoiding anything gimmicky. Focusing on true customer-value should lead to stronger relationships and longer-term growth.
I totally agree with this point. I own a resort apparel and jewelry company called Sand Shack, http://www.sandshack.com, and I know that although my products sell very well when I discount them, a store (I sell wholesale), is more excited when I offer the products at full price with the guarantee that if they don’t sell they can swap them out for other products we offer. In addition to that we offer free display stands and marketing material to help them display and sell the products in their stores. Now that is value, something a discount can never beat.
I am a young entrepreneur and I regularly blog about my adventures and lessons, and I recently wrote an entry about providing free displays and what that does for you and your company. It can be read here: http://brianlinton.com/?p=24
Cheers!
Brian