When the economy is tight, you may be tempted to cut prices in an attempt to stimulate sales. But depending on what you’re selling and how you’re trying to position your business, big price cuts may not be such a good idea.
When you lower your prices too much, you affect how people perceive the quality of your offering. If you’re priced waaay lower than the competition, people are likely to think that’s because your quality isn’t as good. And, it turns out, perception is, indeed, reality — possibly in ways you might not have thought. It’s amazing what the power of the mind can do.
Trying to beat the Wal*Mart’s of the world at their own low-pricing game is almost certainly a losing proposition, especially for a small business that can’t muster the kind of purchasing clout Wal*Mart wields.
For an alternative strategy, read this article I wrote for Search Engine Guide: Marketing in Hard Times: Pricing. We’ll explore why “adding value” may be a better strategy in the long run.
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