Jim's Marketing Blog

Marketing ideas to help you grow your business

How to grow your business during a tough economy, without lowering your fees

With daily media coverage of the turmoil facing most of the world’s economies, how come certain businesses, of all sizes, from all industries are flourishing?

It’s not about price

fee settingWhenever times are tough, people think harder before they make a decision.  This doesn’t mean they buy the cheapest.

The fact Apple products have repeatedly smashed their sales records, is not because they are cheap.  Apple products are almost always far more expensive than budget alternatives.  Apple have seen record growth throughout the credit crunch and recession, because they provide what their customers consider amazing value.

Google and the race to the bottom

If you think you can undercut your way to success, you are probably in for an costly disappointment.  Google has made it easy for your prospective clients or customers, to find the lowest price for almost anything, in seconds.

Only one person in your industry, profession or location can be cheapest and the price shopping, fee-sensitive people who hunt for the cheapest deal, will spend as long as needed, to get the lowest price or fee.

Another approach

An alternative approach, is to increase your value, rather than lower your fees.  If you are the only person in town, who can do something YOUR way and YOUR way has value, you can strive during a bad economy.

For example, I have a client, who has used this approach whilst working with me and he’s seeing a 45% increase in revenues this year, after enjoying  an increase of close to 200% last year.  His profits are even higher.  Another client has increased her fees several times over the past 2 years and has smashed every income and profits record, in a business, which is in a hugely competitive industry.

With 2012 just weeks away, it’s a great time to plan for the year ahead.  With every prediction suggesting that the economy is unlikely to improve significantly, if at all, I recommend you take a value-based approach.  If you wan to know exactly what to do, read this.  You can enjoy an outstanding year in 2012, so long as you do the right things, correctly!

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  1. I have not previously heard that phrase, a race to the bottom.

    For me, it paints a perfect mental image of providers all bustling for position, to see who can go bust first.

    Another great post Jim.

  2. Jim

    Great post – anytime of the year!

    I often refer to the old quote, “If you have to ask the price, you can’t afford it.”

    For my own practice, it’s about value and ROI. When I hear “So what is your rate?”, I stop and ask “What return on your investment would make you say ‘This is a success?'”

    And for my clients, it’s always about targeting those that aren’t price sensitive and making certain our value proposition is clearly, consistently communicated.

    Life’s too short to get caught up with price sensitive customers – so focus on those that appreciate quality, value and ROI.

    Best, Pat

  3. I love this post Jim. I’ve been banging on about the same subject for 8 years! Adding value without decreasing fees or price is a no brainer. After all, if you start discounting, where will it end? No one wants to buy in a falling market, it only decreases buyer confidence.
    I wrote a blog post on this last year, called “Don’t Drop your Asking Price!”
    Thanks Jim for bringing this often tricky subject out in the open for discussion.

    • Hi Samantha. Absolutely. Lowering prices or fees is the fastest and often worst way, to show an increase in value. Thanks for the comment.

  4. Amen to that Jim. I strove to use that approach during the lean years of ’08-’09 and while it was tough going, I’m glad I did so. My 2011 business is up 33.3% over 2010, and I’m confident that it’s not because I’m the lowest-priced provider, but because I bring value to my clients. And I’m very optimistic about 2012.

  5. Great message, Jim.

    As I tell my staff, if they don’t want to pay for it, they don’t have the money or they don’t want it badly enough. It’s not because of our value. If they can’t pay what you need to charge, you have to walk. Otherwise, you that (cheaper) client may take the space of one who’s willing to pay full freight.

    Appreciate you, as always.

  6. Yes, it is not about the price. I notice some business lower their prices so that the customers can notice them that they are less expensive than the others. But actually, the lower their price, the lower their profit. This causes their business to crash and close. If business men don’t know what to do in every tough situation, they will end up bankrupt. Thanks for this post though.

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