I love reading biographies about entrepreneurs from generations ago.
Times and tactics change.
What’s most interesting to me are the things that don’t change much in the business world.
Some of the most important lessons I’ve learned have been from entrepreneur stories from decades and centuries ago.
I’m reading the biography of Cornelius Vanderbilt now. He’s another entrepreneur that believed in the power of lowering prices whenever possible. He was able to put companies out of business when they had the advantage of government subsidies.
Lowering prices is good strategy. But there is another way to accomplish the same thing…
What Does The Competition Charge For?
Many companies charge for more than just one product or service. They may have a main product, but they also have things they likely charge for and for you…that could be an opportunity.
For example, in the auto repair industry you’ll often have to pay to have your vehicle examined when something is wrong. Then once the mechanic figures out what is wrong they add on the charge for the part plus their labor.
That all makes sense.
Another example, you go to the dentist for your regular cleaning. There is a charge for the dentist to come in and go over your teeth and x-rays to see if there are any issues.
Again, it makes sense.
On more example, you go to the bowling alley and they charge for the games and for the shoes.
Seems to make sense.
But for these examples and for any examples in your industry there is an opportunity every time a business charges for something…
Undercutting Your Competition
You might not be able to cut your prices. Although I would recommend looking at ways to cut your prices as much and as often as possible. Look for efficiency everywhere.
But if you can’t cut prices maybe there is a way you can offer more while not charging an additional price. You offer more product or service for the same prices.
Instead of charging for the vehicle examination, some mechanics will have a charge for it, but then they put the charge toward the repair so the initial fee is essentially waived. For example, the mechanic reviews the situation for $100. The repair is $200. You pay $200, not $300.
Instead of charging for the dentist exam, some dental practices waive the charge and perform the exam as a courtesy knowing that the cleanings and dentists performing dental work bring in good revenue.
Instead of charging for shoe rental, some bowling alleys charge only for the game. It seems industry standard not to charge for the rental bowling balls. Why charge for the shoes?
In cases like this the main benefit is that you’re offering more value to customers. And when you offer more value than the competition you’re more appealing no matter how slick the marketing is from the competition. People almost always want the value.
If you can’t offer the lowest price, look to offer more value for the same price.
Freebies for Everyone vs. Freebies for Customers
There is one more choice if you’re going to offer a product or service for free… That choice is whether you’re going to offer the freebie for everyone or just for customers.
I’m a believer that the best marketing dollars are your product or service. Giving away some or part of your product to anybody is a good way to gain attention.
But depending on your situation it might not be financially wise to give something away to everyone. But it might still make sense to give something away to current customers.
For example, the bowling alley isn’t going to let people rent bowling shoes for free if they’re not going to bowl.
Business always comes down to value. You can do cool things with marketing to get attention and to build your brand. But in the long run people are just looking for the most value. And with the Internet, word travels faster than ever. You can’t fool people for long if you’re not offering the most value. Cutting your costs is probably the best way to increase the value you offer, but also look at what the competition charges for and see if you can offer it for free as an add-on to what you’re already doing.