I’m a big fan of the 2Bobs podcast, and an episode of theirs from a few years ago (“Truths and Myths About Money“) crept back into my mind recently. In that episode, Blair Enns said two very important things about pricing your product or service.
Price is ideally only a tie-breaker
When you find the right client that needs what you have, price is really only a tie-breaker. They want the right company/product to do the job, and you have what they need to get the job done.
If you can stand out with the right solutions, integrity, chemistry and everything that someone needs, price really only comes into play if someone else can match you on all of those items. It can happen, certainly, so fair pricing is always important.
That leads to the second big insight from that episode…
If you’re losing business on price it’s not because you’re not cheap enough, it’s because you’re not good enough
If a potential leads goes to one of your competitors instead of you “because they were cheaper”, that’s not likely the actual reason. It’s really because that person saw you and your competitor as roughly equal, and then price became that tie-breaker.
Blair sums it up nicely with this:
You’re down there competing on price, right? If you’re competing on price, it’s because … the client thinks he can get just as good quality somewhere else for less money. So instead of focusing on cutting your price, focus on raising the quality of your offering.
Always be looking for ways to make yourself stand out among the competition, but also be constantly leveling up so you have the skills and innovation to make people proud to hire you.
As Seth Godin is fond of saying: “The problem with a race to the bottom is that you might win.“