Everyone has heard the term inflation. Most can tell you what it is. This is not an “economic” post. But did you know there’s also “deflation?”
Our current economic climate has actually had more deflation than inflation. Yes, certain prices have risen. But wages have not and a whole lot of other things have actually come down in price. In short, there’s been deflation. If you’re scratching your head and saying: “Mike, remind me… what prices have come down?” My answer: “How about home prices and extremely low mortgage rates.”
The “Great Recession” has activated the “price shopper.” Financial Guru, Dave Ramsey said something like, “The paid off mortgage is in style, the BWM you struggle to make payments on is not.” I agree with Ramsey! A recent USA Today article gave deal sites like, Groupon and Living Social a little credit for boosting the “shop for best price movement.”
The First Step…
Awareness. If you pretend your prospective clients and customers are not price sensitive you’re sticking you’re head in the sand. If you embrace the bargain shopper too much you’re also in trouble. As Dan Kennedy puts it… “The problem with competing only on price is the ultimate outcome is free.” Yes, Google built a business around a free search engine. If you can stay the course and have plenty of investors maybe you can build your business around free too. But the rest of us have to make a profit.
Change The Channel….
The fact is we all have competition. Many claim to be better than you. Some are, some are not. Many will sell the something similar for a lot less. (remember similar does not mean the same!) The smart ones won’t compete on price. Savvy business people do not compete on price. Good clients don’t buy on price either. Everyone is NOT “looking for cheap!” Therefor not everyone should be selling “cheap.” Let your in-experienced, brainless competition sell on the cheap. Unless, they’re name is Sam Walton, don’t worry about them. As a side note: Even if they are Sam Walton you can still compete by offering competence, personal service and atmosphere.
When I had my martial arts business from 1998 to 2008 we frequently raised our tuition. Every once in a while I’d find myself in front of someone who put off the decision to enroll for a few months. When they came back they were sometimes a little upset about the price increase. If they asked: “Why do you raise prices?” My reply was: “Simple! We increase our knowledge every day. We are always getting better (not worse) at what we do. Each day we gain valuable experience. This experience is passed on to our students. In short, we increase our value we don’t decrease it. But, lucky for you – we don’t increase prices every day, just every so often.”
Did You Catch The Message?
What puts you in control of not falling victim to the price-war game is to get better at what you do. To increase your own value. To really be an expert, not a “fexpert” (a fake expert).
Once again I will credit Dan Kennedy. He said something like… “Don’t get paid for what you do. Get paid for who you are.”
By embracing a few of these ideas and adjusting your mindset you can elect not to participate in “Marketing Deflation.”