Why LOWERING PRICES Fails – And What to Do IMMEDIATELY Instead!

Don't compete on price. When you compete on price, it's a race to the bottom because there's always somebody who's going to undercut your prices to scoop the customer up. Customers are not loyal to you when you compete on price, and it's really hard to build a long-term sustainable advantage in business when it's only on price. I got a question from one of my YouTube viewers— love you guys— Colin wrote in, on one of my videos I mentioned competing on price is a recipe for failure, and he's wondering why is that. He said he rents a house in Pretoria, it's a rental property for him, and he has resistance on the price, and every time he drops the price he gets more business, and when he increases the price people don't want to go with him anymore. Here's the thing, Colin, and this is a challenge for every entrepreneur because we typically undercut our prices. You have to find something else to make your property stand out beyond how much is it. Price is always a factor in any buying decision, but you want to decrease the importance of it for your customers. And it comes from increasing the value of what you're offering. It's not just the location for you. Think about any hotel chain. You've got the budget motels, the slimy places where you might not actually want to spend the night in their bed, but it's super cheap, all the way up to the Ritz-Carltons and the Four Seasons of the world. What's the difference? You could have two hotels across the street from each other, one with a massively different price than the other. It's because the, the hotel with the higher price has a lot more service. They're offering something different, something that people will pay for that the other guys aren't offering. It attracts a better customer to you. It's attracting people who value service, who will treat your place better, who will refer more clients on to you. You don't want the guys who are just going to pass the low-budget, bottom-of-the-barrel clients on to you. You want the guys who can pass on real business to you. So you have to now think about a way to make your place stand out. So that the only thing you're competing on is not just price. You should be able to charge that extra $50 or $100 or whatever it is because you're offering so much more value than your competition. And it doesn't have to be things that cost you a lot of money. It's more perceived value. So start thinking about everything that you can do to make the experience better for your customers. So there are some basic things like do you provide Free Wi-Fi, free parking, right? Just look at the hotel industry. But what else could you do? Imagine the life of somebody who's coming to Pretoria. Okay, they may not have ever been there. Look at a typical persona of your average customer coming to you, or maybe more your ideal customer who's coming to you. What are their challenges? People pay Four Seasons because of the convenience, because they're helping make those people's lives easier. It's not that people like paying hundreds and hundreds of dollars every night for one hotel room. So what else can you add to the experience of your customer? When they're coming to your place, what are their other problems? Lodging is a problem. You've solved it. But what else do they have to do? Are they tourists? Do they need to know about Pretoria? Would it be helpful to have somebody give them a tour? Would it help— be helpful to have some information in their room about great places to eat, great things to see, any holidays that are coming up, any important festivals or events that are coming up. How can you up the value that you're providing so that if you do increase your price by $50 or $100 or whatever it is, you're not going to get that massive drop in business? This is a challenge for every entrepreneur because we typically undercut our prices. And I know it's hard, and I know it comes from a belief that that we're not good enough, that we don't deserve to have that money. Where you should be, you should be the expert at what you do and you should care more than anybody else, 'cause it's your business. So if you really care about your customers, find other ways to add value to the experience with them so you can justify charging a higher price. When that happens, you'll have a lot more success. And you can apply it to every property you have, every business that you run, and it'll make all the difference in the world. Believe. For those of you watching, you like the video, please give it a thumbs up below and please leave a comment underneath. I want to know what you're thinking. The comments really make my day every day, so I love seeing them come in. Thank you so much, and I'll see you guys soon.