The Dangers of Positioning Your Services Brand on Price Alone

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Depending on what you offer, and what the landscape in your industry looks like, competing on price alone might be a good idea in some cases…

But mostly, it is a terrible idea – based on what we learned from experience.

Yes, it seems counter-intuitive. Logic tells us that we need to lower our prices to “get a foot in the door”. Once you have your foot in the proverbial door, you can start increasing your service rates, right?

The reality, however, is somewhat different. Allow me to explain…

How competing on price alone hurts your services business.

Here are a few things you need to keep in mind:

1. Low prices attract desperate people:

Desperate people – who cannot really afford properly priced services – expect you to make all of their headaches disappear for the price you quote to fix ONE.

We respect the fact that desperate people are also just trying to make a living, and don’t always do it well. However, from a business perspective, it is not the best client to have.

Due to their typical situation, their needs are typically far more than they can afford to pay for. However, since you came on board, you become their savior, and they expect everything to be resolved as if by magic.

Unfortunately, for you as a service provider, it ultimately means putting in additional hours you don’t get paid for, which sacrifices the income you could have had from selling those hours to someone else.

The sad part is that, if you are really geared towards helping others, you stick it out – to your own detriment.

So if someone comes to you based on price alone, or fights for a lower rate, always remember that the issue on the table is probably not the only thing broken in their business.

2. Their mindset can be counter-productive:

Once again, from experience, we have found that many of these “desperate clients” are set in their ways, and refuse to acknowledge that the path they chose led to their situation.

They expect you to “just fix it” – so they can continue along their original trajectory again. When you suggest improvements, they are often shot down or ignored – especially if they require additional expenditure.

3. Expectations vs budget:

When you land a desperate client, chances are they will not be able to see the process through. They just want a quick fix.

For instance, over the years, we have tried to help many people on really tight budgets…

Unfortunately, from their perspective, the amount of money they spend on you is substantial – so they want instantaneous results.

In our line of work, it often meant clients who expect their businesses to be profitable within one month using content marketing, which we all know doesn’t work that way.

Fair enough, there are people who claim they can make any piece of content go viral, but our guess is that they charge a little more than the average marketing consultant does.

It also meant that – while we had people who wanted us to market their businesses, many of them refused to spend any money on their websites to improve conversion rates.

As a result, what little traffic was generated in the short period  they could afford us, was lost.

4. What it means for YOU:

It means that – in most cases – you are never able to finish what you started. Or you are able to complete one fix, only to be told to stand down on the other issues you uncovered.

As such, you end up doing a lot of work, but because all of your clients are still experiencing (other) problems, you are unable to build a reputation for being a problem solver.

You can work for decades, and still not have a track record, and as such still be stuck with servicing desperate clients.

In conclusion:

If you cannot compete on price, and you have no real USP, how do you differentiate yourself from the competition?

By charging average rates, but by stacking value. What are the things that you can throw in with your service, that won’t cost you too much and not require too much time?

That will depend on your industry and what your prospective clients need.

But by breaking away from clients who only run after a low price or fee, you can then attract better clients – who not only truly benefit from your help, but who will tell others how good you are.

In short, go after people who don’t expect you to fix multiple issues for the price of one – and who can afford seeing things through if you need to do additional work.

And then package your offer in such a way that they feel they will get more from you than from the next competitor.