In business, we have the opportunity to lead on strengths with our products and services. Many times, that leading is through a better/optimum service offering. Other times it is through offering higher quality. Sometimes it is lower price. When the offering lead is lower price, I hear people speak to that as though offering a lower price is the worst thing in the world. Sometimes (many times this is not the case, just sometimes) this is a good lead. As a pure capitalist, let me explain.
When we start our businesses and run them, our hopes and dreams revolve around one measurement: how much money do we make? Our contribution as an excellent service or product, our ability to employee others, our simple ideal of pursuing our passions do not go far if we do not make much money.
Let me share one other example: Dollar Tree. The concept of a store where everything was one dollar was scoffed at, laughed at and scorned by business experts. As you can see 15- 20 years later there are chains such as Dollar Tree which have not simply survived, but have thrived. Sam Walton started with the same concept; sell the cheapest product , and sell more of it (I think Walmart has evolved outside of the scope of Sam Walton’s vision, but that is another article).
If we are not profitable with our business we are a charity, a hobby, or simply a waste of time. Our lives are not controlled by money, except when we don’t have it. Zig Ziglar said it best, “Money isn’t everything, but it ranks right up there with oxygen!” So with that concept in mind, I ask you, if a business can make a comfortable living by selling on low price, is it a bad thing?
If we simply lower our cost to “match” the competition, that is a different story. I am speaking of the strategy which begins with being the low cost option, not starting with the quality and service option and then having to match on one slice of what you offer (not putting the other two slices into play).
Early in my career, I saw a business which had figured out a great way to make good money by being about half the price of where other businesses priced themselves. They were driven toward the lower priority bride who didn’t want to pay top dollar (the high quality and high service folks), but didn’t want to go without either. This business through offering a half price option, put in about the same amount of work to profit about $80,000 each year. They formed the processes and systems to make their effort yield the most return.
The idea of offering a low cost option is not for everyone. The idea of making a good living, however appeals to most. It is my feeling that when you offer a competent product or service at a low price, you are serving a portion of the market. When you offer a service or product on the high end, you are also serving a portion of the market. The key is to determine who you want to serve. I happen to believe in serving the high end. I am just saying that there is more than one way to serve the market and make money. Whichever you choose, make sure it is the best for you! But, make sure you go into it with strategy and a plan!