“A word of warning for the new business owner: Be careful about pricing your goods and services below your competitors. It is very common for potential customers to “beat you up” on your prices. Many times they will seem to only care about a lower price. As the new person in the marketplace you will be tempted to take all the work that comes your way. You will be pressured to give new customers your “best deal”. Our advice: stick to your price.
As a new business owner you are going to have moments of doubt in your pricing and consider whether you should make an exception and give a customer a price reduction in order to get a sale. When these situations occur it’s time to get out your business plan and look at your cash flow projections. Consider how much more work you will have to do if you lower your prices. Experienced business owners have learned this lesson the hard way – it’s not worth it to be the lowest-priced choice. You have to work harder and longer for your profits. And the customers who are only interested in your price are not the best customers.
Yours truly, Gail
Gail Margolies Reid, CPA
Author of The Guide to Low-Cost Startups
505 Mount Everest Way
Alpharetta, GA 30022