Race to the Bottom With Your Costs, Not Your Pricing

I was in traffic during the week and I spotted a small removals van with a sign emblazoned on the sides. It said something like “Your entire home moved for €249/299“.

And it struck me that the guy better have a way to cross sell, up sell, sell add-ons, sell trimmings/extras or he won’t last long in business. Because the problem with trying to run or grow your business on being the cheapest has a fundamental weakness: somebody else will come along and be cheaper.

And you are screwed.

Now it is true that the guy could have been using this offer as a loss leader, something to get people into his net and give him a chance to offer them more profitable services or add ons.

I sincerely hope so.

Racing to the bottom with your costs is not only rational and sensible, it is a necessary part of your business.

But racing to the bottom with your pricing will leave you struggling to make a living.

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