Is price a determining factor for whether or not a company succeeds?
The question of which sales price is the most optimal for a product or service can be approached in several ways. This partly depends on whether your product / service is new in the market or has to compete with others. In the current market with all its (technological) innovations, customers have a better and up-to-date insight into prices and conditions. Since the internet, customer behavior has changed continuously and whether you sell products or provide services, all entrepreneurs experience increasing competition and many entrepreneurs try to face this competition through pricing policy. However, price is not always the biggest driver for the customer. Today's customers want to be heard and receive personalized advice; they want to experience a “personal offer”. It is precisely in this area that the entrepreneur can distinguish himself.
Customer interaction is a success factor for the entrepreneur. This is partly dependent on the distribution channels to be used, whereby the increasing technology may be “at right angles” to the interaction to be achieved; how much easier the interaction is if you have one-on-one contact with your customer. After all, the personal contact allows you to respond to both verbal and non-verbal signals. But it is precisely because of technological developments that the distance between customer and entrepreneur is increasing.
So the priority is that the entrepreneur keeps asking himself: “How do I want to be viewed by the customer? What is my focus ?:
- Do I supply customized products?
- Do I deliver unique products?
- Am I the reliable supplier?
- Do I offer the best price? ”
From this focus, the entrepreneur must determine his pricing. Price in line with focus is essential; an example from my practice is an entrepreneur, who 2e-hand furniture "pimped" in such a way that it got a unique look. He tried to keep the selling price as low as possible, but the sale was nevertheless very disappointing. Only after he increased his sales prices in line with what was customary in his environment did his turnover increase: unique and cheap therefore did not fit.
The entrepreneur will have to keep wondering whether his pricing, and therefore his focus, contributes sufficiently to the success of the company. As said, customer behavior is constantly changing and the entrepreneur will have to respond to this.
George Engel, director of Vrijzathe Financial Services and business manager at MKB Doorstart