Have you ever been tempted to lower your price on one of your products and services drastically to get customers?

From looking at a number of websites this seems to be gaining some popularity. One I saw today offered logos for $99 and the other services offered at a much higher price.

Sometimes in retail you see drastically reduced prices on a particular product to get people in the store. Once people visit one idea is to get them to buy other products at their full price.

However offering very cheap prices is not always cheerful for your business or if you are a customer.

Here are a few traps of the low price option:

Competition

The problem of lowering your price so much, especially if you do it for an extended period of time is that you can get compared to the whole host of free or other very cheap options available.

This means you are competing against them and not against the higher priced ones that you intended.

If you are competing against free or even lower alternatives then you may be seen as more expensive even at the low price and lose out anyway.

Perception

If you are a customer as in the case of the logo above be aware of the limitation in what you get. For example in the form you had to submit there wasn’t any mention of your positioning, customers, competitors or even where you are going to use the logo.

These areas are covered when you get a designer to develop your brand identity. Many times the old say is true that you get what you pay for and if you are not aware of the limitations of the service as in this case you may regret it.

Customers

Short sharp price discount promotions can work and usually on products or services that are bought on a frequent basis. Customers may stock up on products or continue buying the service if is normally done on a regular basis and that can be okay.

If there is not a high chance that the types of customers you are attracting with these cheapies will buy other products or services at a higher price then it doesn’t make sound business sense.

While it is tempting especially when you see other businesses doing these types of promotions it is worth considering all aspects before you jump in. Above all else do some number crunching to see what the impact can be if you take this approach.

About the Author:  Susan Oakes

Susan Oakes is the founder of Marketing for Business Success Pty Ltd and M4B Marketing. Susan helps small businesses get and stay on the path to marketing success. The core is building and strengthening key customer relationships and keeping marketing simple to get greater results.

Link to Susan's website for more info.