Coaching Tips

Do Your Shoppers Buy On Price?

business coaches brisbane

Many business owners that I speak to are firm believers that their customers purely shop for the best price. Nothing is further from the truth. This was demonstrated in a classic situation with a new client.

As part of my initial investigation about their business, I asked when was the last time they had raised the price of their products. Over 2 years ago was the response. When I enquired why they hadn’t increased their prices considering the rise costs for electricity, wages, rent and raw materials I was advised their industry was extremely price sensitive and any increase in price would result in their customers shopping elsewhere. After much discussion to convince them this would not be the case, they could not be swayed to increase their price.

So I asked what their major competitors were charging and was advised, “the same price as us, some may be even cheaper.”

“Are you sure?” I queried.

“Absolutely,” was the response.

“How do you know?”

“We just know.”

Being the doubting Thomas that I am I persisted and that’s where the chink in the armour appeared.

“Well that’s what our customers tell us.”

“So you’re not actually certain” I said.

“No. Not 100% certain”

So I suggested, to be 100% certain to check over the next week and see what their competitors are actually charging. When I met with them the following week I asked how they had gone checking how their price compared to their competitors prices.

“It was really interesting,” my client said.

“What do mean by that?”

“Well we charge $33, one of our competitors is charging $45, another $43 and the other $41.50 plus $2 delivery.”

“So it was interesting to find out your competitors weren’t charging the same as you?” I asked.

“No. What was really interesting was why we didn’t have all the business!”

“Yes that is interesting” I replied.

That week we put up their prices and immediately put $125,000 on their bottom line. How many customers did they lose? Zero. How many complaints did they get? None. A price rise is really just a reflection of value. Value is more than just your product or service. Value is really about what your customers feel they will get when they purchase from you. Too often business owners under value their service or product and focus just on price. When you focus on price you have nothing else to sell.