Making Sure That Your Competitor Makes More Money Than You

Are you trying to price your product or service by asking your potential customer what your competitor's prices are? If you consistently charge less than your competitors, you will always make less than your competitors. You can't possibly do all the business in your area, so by pricing yourself in this way, you guarantee that you will have less profitability than your competitor, who will do all those jobs you are too busy losing money to do. And because you are so busy losing money, your competitor can charge more than he might have if there were real competition.

Competition isn't a game of “How Low Can You Go?”. It is a system of checks and balances that works only when the players understand their true cost of doing business and charge accordingly. A business ought to be able to sell a quality product, at a price that satisfies the customer that all is being done to safeguard his or her investment, while allowing the business to pay for materials, labor, overhead, and, in good times, a little profit.

Promising your customer that you can beat the competition on price is just like saying “I'll willingly forsake any hope of making money.” It won't kill you right away, but every day you go to work and get a little closer to the failed business graveyard.

If you want to beat the competition, beat them by offering a better product, or better service. Otherwise you are promising the customer the lowest quality job you can get away with for the money.

When you need wiring done in your house do you look around for the cheapest guy who has a pair of pliers, or do you hire a professional electrician to keep your family safe? If you want quality, competent work, you hire a professional. You get someone who understands what they are doing instead of someone who is copying what they have seen someone else do.

Fortunately, in the fence industry, it doesn't cost twice as much to get American made quality hardware covered by liability insurance, instead of poor quality, imported knock-offs. It often costs the same or less for the products, and you never pay to replace them if they should fail for any reason.  (Or shouldn't, if you get them from a reputable source.)   And American consumers are overwhelmingly willing to pay more for American made products.

A lowest price guarantee means that your competitor will make more money than you.