Wealthy people know that money is just paper and is one element of what it takes to be successful, they understand it is a bi-product of something of real value, and is a tool to help manifest that valuable service.
We are not saying money is not important ,it buys food and puts a roof over your head, but by concentrating on money and price only, your will not find true happiness. The story of Midas was told to me in school, and then it was a lesson in being careful what you wish for, however I did not get to understand the real deeper meaning behind the fable until I was on my entrepreneurial path, the story now tells me to concentrate on making others wealthy first, then if money is an element of this success, you will receive ample paper money as a tool to make the end product work.
We are all guilty at times of selling on price, when business gets hard and we need more liquidity, we think we see an easy way which is is to slash the price with a discount to get the deal and get quick cash flow, but what actually happens is you make your work harder for yourself in the long run.
Always go up and never down.
As a UK government recognised SFEDI mentor, we always see discounting as a very last resort. What we always try to advise is to put up the price and re-package with more value.
A good example will be:
Fred has an independent fruit shop and sells Apples for $2, he is well established and has many regular customers until one day a supermarket opens down the road from his shop selling Apples (the fruit for any Millennials reading this) for $1.80 per kilo, many of his regulars buy from the supermarket now so he is losing the battle. He cannot make any profit as he buys his Apples in at $1.80 so what can he do?
What he can do is repackage his Apples with say 2 Apples and 2 Bananas or a fruit basket, that way he gets to sell more and could even get more than his usual $2 per kilo for the Apples alone.
When you increase your base profit, your business and in fact whole life gets easier. Discounting is actually cutting the longevity of your business. When you are profitable you can also say no to bad business that you didn’t really want to do in the first place.
When you fight on price; someone will always be cheaper until there is no value left.
The Groupon model is a good lesson for new start-ups and how reducing prices to get things going may seem like a good idea to raise awareness for your brand, but it must be coupled with making sure your new customer understands the significance of ‘the deal,’ how next week the price is back to normal and that the new client ‘sees’ the value of the product or service and not the price.
Like for like
This business term came out when sellers realised their competitors were muscling in on the deal and slashing prices, smart business people looked at what their competitors offered and reminded the client that it was inferior to their product and maintained their pricing, more often than not the buyer is not stupid and agrees to the higher price because they recognize quality and robustness over price.
The price of local knowledge
One recent example of price conditioning is China Marketing. Many Western businesses are looking to get their brand exposed to the Chinese market of over 1 billion people. Many company owners are laboring under the misapprehension that because many things are ‘manufactured cheaply’ in China that marketing a Western business to the Chinese populace would also be cheaper than it would be here in the west, nothing could be further than the truth.
just to get a business account on WeChat their most prominent social media closed loop network in China which has hit a market capitalisation value of around $529.9 billion in November 2017, overtaking Facebook at around $528 billion will set you back around 20,000 Euros.
Key Opinion Leaders in China are put on a pedestal by the people and they hold sway over a lot of business and can command around $20,000 a post.
Marketing in China is a completely different ball game to that in the West, and many companies are sprouting up now promising to be able to do this for you cheaply, all we can say is Caveat Emptor (buyer beware) It is not a cheap affair for you to get your brand seen on China networks and you must at all costs use a company that is Chinese based to have a deep understanding of Chinese culture and business.
So next time you ask for a discount remember are you asking for quality or are you asking for trouble?
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