For many years I kept a sign up in our shop. It read
- We offer the best products you can buy.
- We offer the best service.
- We offer the lowest prices in town.
- You can choose any two of the three.
The fact is that no business can offer quality products, excellent service, and the lowest prices. If you want your business to be the low price leader in your area something will have to be sacrificed. A Cadillac dealer could not sell his cars at the same price as that of the Yugo dealer. Yes, there are people who bought Yugos even though they were considered among the worst cars ever built, but there is a good reason why production of the Yugos ceased several years ago.
Our business was almost always at a price disadvantage when we submitted estimates to potential customers. In some cases, the products we sold cost us almost as much as what our competitors were selling their products to the public. We also worked very hard to provide excellent service, something that some of our competitors did not. Occasionally, a potential customer would have our competitor do the job because “he was cheaper,” and then call us a few months later begging us to service the competitor’s product because he could not get that company to provide service.
At first, I was bothered when people went with the lower price competitors until I attended a sales seminar. A speaker made a comment that stuck with me. He said, “You cannot do business with everyone in your community. Do business with the people who can afford to do business with you.” It dawned on me that I really didn’t want the person who wanted the lowest price. Nothing you do will satisfy such people. They will always want a “deal.”
I want to do business with people who want value for their dollar. When I can provide good value to them through the products or service I provide, they will be willing to pay for it. That money can then be reinvested back into the company to make it even better and provide me with a good return on my investment. It is a win-win for everyone.
There will always be people who need the lowest prices they can get due to their economic situations. I have no problem with those folks nor do I have a problem with the businesses that focus on that customer base. I’ve been there in my own life, and I was grateful there were businesses who could provide me with the products and services I needed at a price I could afford.
However, it’s hard to grow a strong, healthy business serving only those seeking the lowest prices. Those businesses have to do a large volume of business due to the lower profit margins they often work with. I would prefer to do less work and earn more money by selling the higher end products and providing superior service that will justify higher prices. I think you would probably prefer that as well, and in order to do that you have to do business with the people who can afford to do business with you.