It happens all the time. You pay full price for a new pair of shoes or brand new laptop and within a few short weeks, the price drops. You begin to wonder if you still have your receipt so you can get a price adjustment. Sometimes the retailer will adjust the price depending on the purchase date and sometimes you end up being the lucky owner of pair of shoes or laptop that’s now 20, 30 or 40% off the price you paid.
Hold up, wait a minute!
Yes, I know. It’s not a good feeling. But it happens.
So, what should a business owner do if they feel the need to lower their prices? The reason behind the decision may vary depending on business and economic conditions.
No matter the reason, below are 3 factors to consider before a business owner should lower their prices.
- Past buyers – If people have already bought the product, why the need to lower the price? Sometimes, small business owners need to bring in money quickly so they roll back their prices hoping to bring in more sales. Why not use the same energy that’s driving you to lower your prices to market and bring in more sales at the current price?
- Trust – If lowering your prices is absolutely necessary, how will you ensure that you don’t lose the trust of your buyers? If you frequently introduce new products (think electronics), then your audience may be accustomed to prices being lowered for newer models.
- New product – Instead of lowering the price of the current product, what about creating a different product with different features at a lower price? It should be easy for a customer to see that there is a difference in one product versus the other. For example, a leather shoe versus a shoe made with manmade materials.
Lowering your prices from time to time may be necessary depending on your industry and other economic factors but outside of those instances, are you willing to sacrifice your profits and buyers trust?
I want to know what you think.
Have you ever lowered the price of a product? If so, how did your market respond?