In this article, I will explain to you why price is not the most impostant thing in business. This text was prompted by entrepreneurs who complained to me that they could not sell their service because it was too expensive. Everyone keeps telling them: price, price, price….
As a start-up entrepreneur, and if you are still engaged in services you will need to determine their price. How? How do you set a price so that you are in the black and get a job again?
Amazing how many people still think price is the most important thing. However, it is enough to look into our own lives and we will realize that price itself plays little or no role in decision making.
Let’s take an example and look at what we currently have on clothes, shoes, jewelry and other little things. Which of these things did we buy JUST BECAUSE it was the cheapest?
If you’re a woman you most likely don’t have any such thing on you, and if you’re a man it might be socks. Maybe. What does that tell us? That a purchase decision requires significantly more information than the price itself.
As I communicate more and more often with entrepreneurs I realize that they are willing to pay significantly more just to finally solve their problems. No one is looking for the cheapest offer but looking for a solution to their problems. And for a good solution they will be willing to pay more. And this is exactly the opportunity for you to make money.
It is necessary to be “a little” better than others and offer a solution to the problem, not a lower price. Put a little more effort and success is almost guaranteed. The only condition is of course that there is a real need (problem) for the services you offer.
Before, I didn’t understand why big companies constantly hire other big companies and pay huge money for their services when I “know” and for a lot of other, smaller companies that might do it better and certainly much cheaper.
It is clear when it comes to large businesses for which smaller companies do not have the capacity, but even for ordinary things to hire very expensive “brand” companies does not make sense.
However the thing is that managers are afraid of making the wrong decision and feel safer to spend a bunch of money on a well-known company. If problems happen it will be easier to defend yourself with the sentence: I took the best company, instead of: I took the cheapest one.
This is exactly the problem with smaller companies that do not yet have a built-in brand in the market. People are afraid to hire them because they don’t know what to expect.
It is up to you to reduce that resistance and, for example, offer a guarantee of quality for the services you will perform. Offer a measurable result that you will meet, otherwise you will return all or part of the money.
When you come to an interview as a young company and they tell you that you are too expensive instead of justifying it, the answer to the question is better: In relation to what? To other services? On the competition? If they really have an offer from another company that is cheaper than yours why should they still take you?
Only you know the answer to the last question, but what you can always say is how you noticed that they do NOT drive the cheapest car or wear the cheapest suit, so why settle for the cheapest service?