If you’re in business and have a product or service that is great value for money you want to tell the whole world about it right? Not so fast. Going to market with a simple ‘we’ve got a cheap product’ sounds effective but it can open a can of wormy worms.
So put the lid back on that can and consider what can go wrong when you start talking about your cheap stuff.
It seems logical that customers would choose the cheaper option. Why not? Getting the same for less seems like a no-brainer.
But that underestimates the complexity of buying psychology, and years of high-priced advertisers telling customers that cheap translates to poor quality and shoddy service. “You get what you pay for” is the oft-repeated mantra. The shrewd shopper knows that’s not always true but you need to bear it in mind when planning your marketing.
Why ‘cheap’ is not always good for business
Here are some common pitfalls for businesses that promote themselves as “cheap”.
- It sends the wrong message – Cheap is commonly associated with poor quality. In fact, it’s often heard with the word ‘knock off’ as if to imply that the reason it can be produced cheaply is it is a poor imitation of the original.
- It attracts the wrong type of customer – While you can sometimes get more customers when your point of difference is price, it’s not always the sort of customer you want. It’s not uncommon for these customers to be more demanding and critical, while less satisfied and grateful – the exact opposite of how you would expect them to be! They can put a real strain on your business particularly since your margins are already tight.
- It creates a USP that doesn’t stay unique – Being the cheapest works at first but it’s not long before you’ll get competition, either from new entrants who copy your business model or existing competitors who will try to undercut and squeeze you out of the market. Price is just not unique enough, unless you can find inventive ways to stay the cheapest (think Ryan Air). The best approach is to use price initially to acquire a customer base then build your reputation (trust trumps price in most cases).
- It can be unprofitable – In the retail world, low margins are only sustainable when accompanied with high volume. Service businesses generally have higher margins to account for things such as quiet times, complicated jobs, rework and the fixed costs that are ongoing. If you haven’t done your sums thoroughly then you could end up working for free, or worse – working yourself into debt. It might be worth getting an accountant to review your business model.
Despite the negatives, marketing based on a cheaper price can not only be successful; it can actually be profitable. You just need to know the right way to go about it.
The right way to market “cheap”
Based on our experience with building cheap websites over the last eight years we’ve learned a few tricks along the way. In fact, our pricing hasn’t changed and we’re still the most affordable website solution from a NZ-based company, which is surprising considering the mushroom-like growth of website builders out there.
1 – Marketing cheap is a little bit similar to fight club – you don’t talk about it. I know when we started building cheap business websites, we actually had that phrase as the tagline at the bottom of the client’s website. It didn’t take long for clients to start asking us to change it; they didn’t want their business associated with something “cheap”. Even on our own website we talk more about affordable, rather than cheap. Sure it’s semantics but words influence how people feel, and that influences purchasing decisions.
2 – Don’t focus on price – If you go on about the price and how cheap it is, people will think that’s all you bring to the table. Make sure they know you’re not a one-trick pony; that you can take care of their needs – it’s the reason they found you in the first place. Price is only an influencer.
3 – Deliver something the higher-priced suppliers do – Your competitors who don’t compete on price will likely have their own USP. Is it higher quality, iron-clad guarantees, after-sales support or bonus freebies? Can you do the same and neutralise their advantage?
4 – Surprise the customer – The trick to doing this well is to avoid advertising everything you offer. Hold something back and drop it in at the end of the sales process. It doesn’t have to be huge but the power of surprise will delight and turn them into raving fans.
So the myth is busted – you can do cheap; you just need to do it right. And if you like cheap you’ll be pleased to know reading this blog is absolutely free…