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  • #991821
    LucasArthur
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    Ouch,

    Ok my title sounds dramatic, and it is a little, although it is more about how we operate our business and how we take pride in prices we (meaning FS community) charge our clients for our items.

    There is always going to be competition in whatever market we are in (monopolies are quite rare and if you had one i am not sure you would be an FS) and we should not always fight for a client or business purely on pricing alone. This is extremely true for those selling common or easily obtainable items in the on line market place where items can be ‘perceived’ as being the same by consumers when in fact they more than likely are not. Maybe the size is different, the material has variations in quality, the legs are different or stitching is different – just relate this to your product.

    If you enter into a battle with another business (competitor) you may very well end up worse off than you want. Firstly, as stated above, your product could be superior in quality or they could be the manufacturer or even worse still they could be a fictitious business selling air and never delivering the items bought (will speak more of this in a second as this is my primary reason for post).

    Be proud of what you sell, be proud of who you are and what additional value adds you offer through service, knowledge and other ‘intangibles’ that some customers actually enjoy more than buying bargain items.. And another key piece of advice is to not be negative towards your competition – DO NOT BAD MOUTH YOUR COMPETITORS at any cost. If you approach sales in a manner that you feel a need to berate your competitors with potential clients by being borderline slanderous, you will be the one coming off as desperate and ill informed should you be proven wrong. Clients or Customers do not like dealing with people that are negative in approach, there is nothing wrong with generalisations and speaking in a broad sense such as “if you are looking for wedding invites, please be cautious when comparing us as we have seen a trend in the market of people saying they are using 110gsm paper and yet are delivery 70gsm store bought paper and not custom high quality paper – just be aware” and this will instil a thought that your product is higher quality and that they can trust you a little as you have offered some free advice.. It can take years to perfect your approach and the pitch will vary depending on your industry, confidence and understanding of your competitors but it can and will work for you if you combine it with outstanding experiences for your customers to thoroughly enjoy when with you!

    So, i have rambled a little allow me to explain why:
    As most of you would be aware we are a furniture importer as well and work within a space that has many nuances to the quality, dimensions and more importantly the retail pricing of items.. What is important to note is that many fly by nighters offer products that display are in stock and yet never are, once ordered an email is sent out (after payment received) stating that their items will be delivered in 8-12 weeks due to out of stock issues.

    So the root of my post, an emerging competitor came onto the scene mid last year with great gusto, an awesome adwords campaign and other social media advertising along with a beautiful website (that i was quite jealous of cos it was like a well polished salesperson) offering AMAZING prices on goods with bundlings of products, extensive range and so forth. We lost a few sales to price sensitive clients, which happens, although have just had a phone call from one of these clients with a large order. As i had a previous relationship with the client (past orders) i asked where he had been, where he was buying from as he is Sydney based which led to the story below:

    He was buying from this competitor out of Sydney with great prices etc, although in the last few months every order he placed became significantly longer to fulfil and eventually he could not contact the supplier to chase several orders he has had and paid upfront for (we are talking $15k+) to secure discounted pricing and specials. This client advised that the companies warehouse has now been vacated, web site down, facebook down, bankruptcy apparently applied for. All of his sales and orders were placed at a time that would clearly indicate trading whilst either a/insolvent or b/clearly ready to wrap up the business and just wanted to fraud people…. The story is a shame, but the true purpose of my message it:

    Do not be afraid to stand by your business, its pricing and its reputation!

    You never know what you are competing against and what motivation the seller has to be at that price. Is it a dodgy clearance of obsolete stock, damaged stock, or do they just intend to not fulfil the order (please i am not saying everyone is like this though) so just be conscious of potentials..

    Knowing a few of you on here, your banter and knowledge will put you above most of the competition. The FS I personally engage with are passionate about their business and their clients, and this alone will put all of you above your competitors :) Believe in this, believe in yourself and your pricing. You never know why your competitors are discounting or what quality of level of service they are delivering for that discounted price!

    If you have done your homework and due diligence, your prices must be right! Assess the client as a whole, should you be considering slashing prices, to ensure it has merit to do so before hand and do not just discount because competitor A is at $x and competitor B is at $x.5!

    Love your work, love your business and be confident in your offerings

    Cheers and sorry for such a long post

    Jason

    Jason Ramage | Lucas Arthur Pty Ltd | E: [email protected]   P: 61 3 8324 0344    M: 61 412 244 888
    #1183524
    Byron Trzeciak
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    I’m not sure if this started out as a blog post but you did capture my attention the further I read.

    I always say that you need to know your process and your numbers. If you don’t know that then you’re going to struggle to run your business. Being cheaper and constantly trying to undercut is rarely a good business plan. Instead try to understand your margins and how you can improve them. Standing by the services you offer, your process and how much you need for your business to survive plus your living costs is very important.

    The businesses that take the approach of your competitors typically pop up from time to time but almost always end up failing. While they might make a dint in your revenue your business longevity is ultimately a credit to you and the way you price and service your customers.

    #1183525
    LucasArthur
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    Byron Trzeciak, post: 214193, member: 56118 wrote:
    I’m not sure if this started out as a blog post but you did capture my attention the further I read.

    I always say that you need to know your process and your numbers. If you don’t know that then you’re going to struggle to run your business. Being cheaper and constantly trying to undercut is rarely a good business plan. Instead try to understand your margins and how you can improve them. Standing by the services you offer, your process and how much you need for your business to survive plus your living costs is very important.

    The businesses that take the approach of your competitors typically pop up from time to time but almost always end up failing. While they might make a dint in your revenue your business longevity is ultimately a credit to you and the way you price and service your customers.

    Hi Byron

    Thanks for your reply and taking the time to read it.. Just to answer, no its not a blog post (although long enough to be a book) as most of my posts are more for FS to think about… I tend to add a little odd content here from time to time ;)

    Your points are extremely valid, and input is appreciated. The reverse engineering of working backwards from where you want to be to justify your charge out rage is imperative (not that you worded it that way) so love that comment..

    Be well and hope business has been generous for you.

    Jason

    Jason Ramage | Lucas Arthur Pty Ltd | E: [email protected]   P: 61 3 8324 0344    M: 61 412 244 888
    #1183526
    checkvault
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    Price shouldn’t be the only point of separation, but sadly it is. Coming from my background which is South East Asian and raised in a middle class family, the first thing I see is the price. Of course, then depending on how much I want what I’m buying and value it, I’ll make the decision. But my point was that the first thing I like to know without hearing anything else, is the price. So I totally understand your frustrations when a competitor comes along offering low prices cos there may be a lot of people out there similar to me.

    And I really do feel bad for your client who lost close to $15k as you’ve mentioned when he paid his supplier UPFRONT without any form of security! That’s just mind boggling.

    As a fellow member, might I offer another point of difference to offer your clients during a sale? We’ve been in discussions before so you know about the product we offer.

    So the point of differentiation can be where you can say, “All of our competitors ask for payment up-front and that’s where you can get in trouble if your furniture doesn’t turn up and you can’t get hold of anyone (website down, Facebook unresponsive/down, etc.). But we at [your company name], offer a secure payment service, where you can ‘secure’ our payment so you can stay in control of the funds, and once we’ve delivered our quality furniture to you and you’re happy, you can release the funds to us.”

    So your clients will feel assured that you’re confident in the delivery or your products to them, and that you’re not there to simply rob them of their payments like your competitor did in this instance.

    Let me know what you think.

    #1183527
    MissSassy
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    Hi Jas, love your work as always,

    It is so vital that as business owners we remain confident in the fact that we deliver a well priced, high quality offering.

    There will always be someone cheaper, and as you have illustrated they may not necessarily survive for the long haul in business. Even if they do survive they may not be able to keep up with technology, machinery they need, insurance and more.

    For example my husband is a tree lopper – it is a highly competitive market and there is always someone cheaper. The cheaper ones have substandard equipment, little or no insurance and they lack the qualifications to do the work safely and correctly.
    For example if you get a tree lopper in and they drop a branch through your house, they don’t have the right insurance – guess what, your insurance doesn’t cover it either. These same businesses are the ones who are illegally dumping in the bush or in commercial areas again to save costs.

    My point being that – cheaper can ultimately cost us all a whole lot more in the long run.

    #1183528
    Johny
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    Hi Jason, Good (long) comments I think and should be read by many who look to sell online.

    What I have found in line with your comments is that:-

    1. There is ALWAYS someone who can sell it cheaper. Can be many reasons, even legitimate ones, so there is much more onus on the buyer to understand what they are buying than what there often is.

    2. For everyone that says they will pay more for quality etc. mostly it simply isn’t true. One of the whole reasons people shop online is because they think it is cheaper. And the automatic reply for people selling when someone baulks at the cost, is to reduce the price rather than emphasis the value. Competition should be an opportunity to be innovative about what you do which then helps to move forward.

    But I do have a question for you. Not a criticism because it is something I also face all the time.

    If your customer went to the competitor, only to come back after being screwed, had you done a good enough job of creating value for them so they would not have gone to the competitor in the first place?

    That sounds nasty when I read it back, but it is really just a question to further the discussion.

    #1183529
    LucasArthur
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    Johny, post: 214210, member: 34822 wrote:
    If your customer went to the competitor, only to come back after being screwed, had you done a good enough job of creating value for them so they would not have gone to the competitor in the first place?

    That sounds nasty when I read it back, but it is really just a question to further the discussion.

    Howdy Mate

    Hope you are well… and that comment is far from nasty :)

    This client buys lots, so they think if they save $5 or a $1k they are better off.. Although i think they have learnt that not all are the same..

    The post is not really about me, my business or my offerings it is really just about understanding oneself and the competition around you. This i know, intimately, and i certainly understand that clients will opt to use someone else from time to time.. Normally, for me, i find i open the gates to competitors by not offering the cheap nasty add ons or substandard items – more to the point using false images to draw people in really. That others do and sometimes my regulars try competitors to see how they are.. This is human nature, as you say people online are initially looking at price. Seldom does this occur, i just used this client as a highlight because it was an interesting and topical point..

    Although, i must have done something right because i was certainly top of mind when i remained professional when i lost them in the first instance and they came back to me :).. Guess i could have gone rogue on him and abused him, cursed and never called him again – although i treated him as a friend, a client and a professional and we have spoken many times since he has ventured away from me… Again, must be doing something right.. LOL

    Without drowning the issue with statements like ‘i’ and so forth, the majority of times that customers return to us and call into our shop for coffees only (no sales and they bring the flat whites to boot) is gratification for us :)

    The benefit we have over a service like trade agent etc, is that our service is an item and therefore tangible. Makes it a little easier for us and to build trust, in store, is easier than via email and the phone from an international location.. Of which i do not envy your challenge on that occasion.

    As always, appreciate input cobber..

    Jason

    Jason Ramage | Lucas Arthur Pty Ltd | E: [email protected]   P: 61 3 8324 0344    M: 61 412 244 888
    #1183530
    LucasArthur
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    checkvault, post: 214197, member: 64474 wrote:
    Price shouldn’t be the only point of separation, but sadly it is. Coming from my background which is South East Asian and raised in a middle class family, the first thing I see is the price. Of course, then depending on how much I want what I’m buying and value it, I’ll make the decision. But my point was that the first thing I like to know without hearing anything else, is the price. So I totally understand your frustrations when a competitor comes along offering low prices cos there may be a lot of people out there similar to me.

    And I really do feel bad for your client who lost close to $15k as you’ve mentioned when he paid his supplier UPFRONT without any form of security! That’s just mind boggling.

    As a fellow member, might I offer another point of difference to offer your clients during a sale? We’ve been in discussions before so you know about the product we offer.

    So the point of differentiation can be where you can say, “All of our competitors ask for payment up-front and that’s where you can get in trouble if your furniture doesn’t turn up and you can’t get hold of anyone (website down, Facebook unresponsive/down, etc.). But we at [your company name], offer a secure payment service, where you can ‘secure’ our payment so you can stay in control of the funds, and once we’ve delivered our quality furniture to you and you’re happy, you can release the funds to us.”

    So your clients will feel assured that you’re confident in the delivery or your products to them, and that you’re not there to simply rob them of their payments like your competitor did in this instance.

    Let me know what you think.

    Howdy Prathamesh,

    Thanks for reply and input my friend.. Although the comment i post is not really about customers/sellers and the security of funds, although i see the merit in what you are saying, although was more about being comfortable in what we charge as a business as many people loose sight of the nitty gritty costs of doing business and sometimes feel they need to drop their pants to compete.

    Personally, i was more interested in reassuring people here that they should be confident in what they charge and to handle the competition and potential clients comments with care and pride.

    On your note about middle men holding funds, i am not sure this would be a solution in this type of industry. There are many reasons for this, which i will not explain as its not the topic of post and would require an intimate knowledge of how we conduct our business, although i will say that this would not work completely.

    example. Item sells and seller says IN STOCK so people happy to pay upfront for next day delivery so they put the funds on their credit card… Oh shoot, email goes out saying we are out of stock and i will send item to you in 14 weeks.. Too late, already paid.. Only way to stop this is by saying every time you buy something that you place funds into a holding account (eg as you suggest with checkvault) until item is delivered.. even if it IS DELIVERED next day, then seller has to wait for the item to be ‘checked off’ to receive funds.. Personally, and for most retail delivery options, not a hope in hell i would wait for the item to be delivered before getting paid… Sorry, no stock will leave my business until funds are IN MY ACCOUNT – call me old school, my reputation and my business and my CASH FLOW are imperative to me..

    Not an argument, just my perspective and back to the point this post is about what you charge and being comfortable with it!

    Cheers
    Jason

    Jason Ramage | Lucas Arthur Pty Ltd | E: [email protected]   P: 61 3 8324 0344    M: 61 412 244 888
    #1183531
    LucasArthur
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    MissSassy, post: 214202, member: 52888 wrote:
    Hi Jas, love your work as always,

    It is so vital that as business owners we remain confident in the fact that we deliver a well priced, high quality offering.

    There will always be someone cheaper, and as you have illustrated they may not necessarily survive for the long haul in business. Even if they do survive they may not be able to keep up with technology, machinery they need, insurance and more.

    For example my husband is a tree lopper – it is a highly competitive market and there is always someone cheaper. The cheaper ones have substandard equipment, little or no insurance and they lack the qualifications to do the work safely and correctly.
    For example if you get a tree lopper in and they drop a branch through your house, they don’t have the right insurance – guess what, your insurance doesn’t cover it either. These same businesses are the ones who are illegally dumping in the bush or in commercial areas again to save costs.

    My point being that – cheaper can ultimately cost us all a whole lot more in the long run.

    Hello Lovely

    Hope you are well? and thanks for replying, always and i mean ALWAYS love your input… So glad someone gets something from these long winded comments… Most importantly, that they understand these prologues (LOL) are designed to make others think and to maybe continue a thought outside of the post to enhance or challenge themselves in their own business…

    Its not always about me, my challenges or putting a hand out for help.. Funnily enough, i actually like helping others and enjoy drawing on my small business acumen and corporate acumen to try and assist others. Definitely do not post to be SOLD to..

    Oh Kelly, i am sorry.. i ranted in your reply :(, not directed at you i promise.. i just got carried away, again..

    Love your work, love your advice, love your clients and customers.. a true ideology to be successful.

    Cheers
    Jason

    Jason Ramage | Lucas Arthur Pty Ltd | E: [email protected]   P: 61 3 8324 0344    M: 61 412 244 888
    #1183532
    bb1
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    Hey Jason, Love your short stories, they always make pleasant reading.

    I can vouch that its best to stick to your price, don’t join the race to the bottom, because that way no one wins, we will always have the people offering rock bottom prices, doesn’t mean we have to follow. we will always have clients who are after rock bottom prices, but they are also the ones who complain the most.

    An example from me, not long after starting this business I won a $20k a year contract for a 2 year period, after the 2 year period, I retendered, but was beaten on price by an opponent, who had inside knowledge of my price. I was given the opportunity to cut my price but stuck to my guns, and he was awarded a 2 year contract.

    Just 9 months in and I was asked if I could urgently come back and take over the contract, as the other business was not performing and just doing a shoddy job (not naming so I can say that). Now I am onto my 3rd 2 year contract, and they don’t even bother to retender as they have seen what can happen if you just go for price alone.

    I have missed out on jobs purely on price as I charge at the higher end, but I take the view I would rather work for someone willing to pay for the job, rather than just the cheapest. Plus a purely selfish view point if I can make the income I want in a year by only doing X jobs a week instead of X plus 10, all the better.

    hope I haven’t rambled.

    #1183533
    annietea
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    Been a lurker here for a few weeks – just had to add that this is a great “food for thought” post. Thanks for sharing, I’ll be keeping this and the replies in mind!

    #1183534
    LucasArthur
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    annietea, post: 214275, member: 67154 wrote:
    Been a lurker here for a few weeks – just had to add that this is a great “food for thought” post. Thanks for sharing, I’ll be keeping this and the replies in mind!

    Hi Annie

    Thanks, welcome and glad someone received some ‘benefit’.

    Look forward to catching you in the forums, dont just be a lurker :)

    Cheers
    Jason

    Jason Ramage | Lucas Arthur Pty Ltd | E: [email protected]   P: 61 3 8324 0344    M: 61 412 244 888
    #1183535
    compton
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    In a race to the bottom everybody loses

    #1183536
    angelarodgers
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    Some excellent comments here. I 100% agree with Jason! It’s important to stick to our guns on our value, pricing and offering. There’s always someone cheaper, and if we start racing to the bottom, here’s what happens:
    – You start attracting less ideal clients
    – Your time and profit get eaten up
    – You start resenting the client, work, and perhaps even your business
    – You are forced to either reduce the quality of what you do or spend a lot of unpaid time to maintain the same level of work
    – You have less time to dedicate to the quality clients who are willing to pay a fair price

    Yep, speaking from experience here. It’s been a hard lesson to learn, and one that I’m still learning, but I’ve realised that there’s much more important things in life and much better things to focus on in business than winning every sale.

    Thanks all for the great discussion!

    #1183537
    qeaou
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    Really good article, thanks.
    Very tempting sometimes to get on board with the price war, but in the end it’s a lose-lose situation:
    – you lose profit margins cannot grow and invest in service and new products
    – client loses value (if you cannot provide added value at the rock bottom price)
    – the industry loses face (sometimes) and credibility

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