The Haley Marketing Group had a very business-wide applicable write-up in last week’s Net-Temps Recruiters e-newsletter, in which they broke down the consequences of lowering prices in a bad economy as well as thoughtful alternatives to price decreases. The newsletter was in response to an inquiry from a staffing firm asking if they should follow their competitors and lower their prices. The medical staffing factoring specialists at PRN Funding thought this information would be useful to our staffing readers. Below is a brief overview of Haley Marketing Group’s response. They claim that lowering prices is a bad idea because it:
- Devalues your services.
- Makes people think you were overpriced.
- Assumes price elasticity exists.
- Assumes price is the most important buying criteria.
- It will be almost impossible for you to raise your prices once the economy picks up again.
Here are some of their suggestions to implement as alternatives to price decreases:
Bundle – offer a discount on a group of services.
Volume discounts – offering a discount for volume purchases does not damage your profitability.
Unbundle – give your clients the option to pick and choose the services they require and are willing to purchase.
Payment plans – offering better payment terms can be a great way to win business without cutting prices.
Prepayment discount – if your customer has the cash to pay upfront, offer a 10% discount on your services.
Increase your value – instead of cutting fees, find ways to deliver higher value services.
Throw in a little extra – give your clients a few “surprise” freebies to enhance your value and differentiate your services.