I caught Ted Coiné’s 12 Most Irrefutable Laws of Business Heresy the other day. I really like that list. And it’s a great title for a post. And it’s an excellent post, great advice coming one delightful rule after another.
Still, I want to highlight one of his 12 rules for this post: Don’t compete on price:
You know who competes on price successfully? Walmart. Ryan Air. And… okay, two companies, in all the world. Let your competitor compete on price. You compete on quality, at a fair price. If for no other advice on this list, you’ll thank me for this.
I couldn’t agree more. And – I thought it was worth noting with this post – I have pretty good indications that you also agree: of more than 1,250 posts on this blog, my post warning against lowball pricing is in the top 20 by page views. I put that as #4 in my top 10 business plan mistakes, but, interestingly enough, it has roughly twice as many page views as any other post about any other of the top 10 business plan mistakes.
And, while we’re on the subject, read the rest of Ted’s list.
I agree with this post and agree with what Tim said. The 2 out 3 rule is definitely something to be aware of. It’s always best to be different in terms of services and quality. Once we start providing more value, the price tag won’t even matter as much to someone who knows we can get the job done.
[…] Don’t Compete on Price. Please. […]
You’re right on the money (pun intended)! I believe entrepreneurs need to be aware of “the two-out-of-three rule”. In order to survive, you need to be competitive in (at least) two of these three…service, quality, and price. Many customers are willing to pay more for great service and quality so there is a real opportunity to charge more for your product/service than your competitors. Also, there will ALWAYS be someone with lower prices, so don’t fret over lower prices….differentiate yourself with superior service and quality.
Well said to both Tim’s I guess you could say this piece is becoming Tim Bits, just like in Canada we have a Doughnut chain called Tim Hortons and thats what the mini centers of Doughnuts are called and sold.
I do agree as starting out on a new business and constructing our business plan I have not really contemplated lower prices because our Service and Quality of work far exceeds the value of our cost.