Recession Tip: Don’t Drop your Prices Yet
Are you suffering from the industry slowdown of web design contracts? Have you been spit roasted by the economic downturn? Let’s face it, web design is a service industry and when the pinch comes on for a contracting company we’re one of the first services to be cut back. But does that mean we need to cut our prices?
In a short answer, NO. In a long answer, pricing is only a small part of your marketing strategy – review what market you’re in, who you’re selling to, and what you’re in business to do. I’ve mentioned this before in various posts, you have to look at the whole marketing package (the marketing mix).
Price is the obvious first choice of many businesses. But you also have to think about your product. Are you serving corporate clients? Or do you work cheap and dirty staying up until 3am to make ends meet? Is your product premium, or budget? And, something we think less of in our web enabled business world, where can we be found? How do we get from here to the client – because just expecting them to find your business would be illogical. Finally, how are you promoting yourself in the industry and to clients? Flyers on windshields? Or glossy bookmarks and expensive hand shaking? You need all of that AND price to tell the same story. You need to know what you’re really selling, who you’re really targeting, and how you’re going to achieve those goals.
Which explains the standard marketing mix – product, price, place and promotion.
When you’re working out what to do about your dwindling contracts you need to revisit all four elements of that mix and not just the easy sounding price. Why? Because, say you’re currently selling to corporate clients and suddenly drop your prices by a third to undercut the competition… you still have a premium product, you still have premium support and delivery services in place, and you still have a promotional strategy that reflects the quality you’re putting out there for customers. And if price is telling a different story?
There’s a good chance that a strategy designed solely around cutting prices will trash your brand and mess with your overall mix. Play around with the other three for a while and leave price cutting until there’s no other strategy to resort to. You never know, you might find yourself in a new niche surviving the downturn instead of providing premium services at budget prices.
