A short YouTube talk by Donna (Genie/Bordeaux) warning that pricing products or services too low can harm a business. She argues that being the low-price leader typically requires scale (e.g., Walmart, Southwest, Costco), and that small businesses who compete on price lose customer loyalty and margin. The video gives examples (a painter who undercuts competitors) and recommends aligning pricing with unique advantages and business objectives rather than competing solely on price; the speaker offers help to align pricing strategies.
Chapters
Can your pricing be too affordable? There's an often overlooked factor that many entrepreneurs don't think about when they price their products and services. And today I'm going to share with you some pricing strategies and how to look at your pricing to make sure you're not affordable. Cheap can harm your business. I'm Donna Bordeaux and I work with a lot of businesses to help them get their pricing aligned with their business objectives. I've witnessed companies that strike struggle to keep their heads above water and keep cash flow coming, only to realize it is a pricing problem. No matter how great the product or services that you offer, you have to have a price right to have a successful business venture. Today, I'm going to share with you the surprising consequences of being affordable. First, we all know that if you're looking for cheap, we all know the brands who price themselves into a model of offering affordable products. Walmart, Southwest Airlines, Costco. Now I'm not saying those are bad places or good places, but we know their place. One thing you'll notice is that those are all big companies. Many times the low price leader has to be a giant company because they're the only ones who can negotiate pricing from their suppliers to match their pricing strategy in the market. Being second place at being the lowest price in your market means you've lost. You can dig a hole, but the only place is down to get to the lowest price if you get stuck in a war with a competitor. So I urge you to make sure that your strategy for marketing is not solely based on price. If it is, lock up, close the door, cash out the bank account because you're done. You're actually out of business right now, even if you might not know it. So don't just use price as a strategy for marketing. Let's take a look at a couple of other things. First, you have no loyalty if you have the lowest price. As a small business, you want to build loyalty and you want to offer a great product or service. You don't want to just price yourself all the way to the bottom. So look at what unique competitive advantages you have in your business and price accordingly. Don't try to undercut just based on price. I worked with a painter, for example, and they told me, find the lowest quote and I'll do it for $100 less. That's not really a marketing strategy. That's a strategy to get to the bottom. If that same painter had said, I guarantee you that your friends will love the job that we do painting your house and that your neighbors will want to work with us after they see our work that I will pay money for. It's not all about the price being low. It's about the quality of the service, and it's about having your unique advantage be part of your pricing. So if you need help getting your price aligned with your products and services so that you're not constantly trying to undercut the next guy, I'd be happy to help you align your strategies.
