Mar
I own many service businesses throughout the southeast.
Naturally I am getting hit hard by the economy but I want to keep my employees employed. At the same time I want to invest in a future “better” economy.
My sales are now down to the point of losing more money than I’m making. Being my services fall somewhere between luxury and necessity I seem to be the last hit by the economy but I’m now getting hit hard.
Off my own back I’m willing to cut customer prices 50% and take an even greater loss for now and keep my guys, the people at the paint stores, the people at the printing stores, convenience stores, fast food restaurants, etc – working.
At the same time that I want all of the above, I want to use the new ad-campaign “Half-price Economy Sale” to further promote my businesses and expand even further when the economy gets better.
I know I didn’t go into detail about what I do but it would take too long because there’s too many and it’s too detailed.
Will it work?
Answer:
Very difficult without the detail but a few thoughts for you…
Slicing prices and promoting yourself on that basis is risky depending on how far towards the 'luxury' end of that continuum you’re.
Plenty of research supports that people subconsciously do equate price with quality so a drop in price, and your proposed promotional message could affect your image - damaging your revenue long term.
Also, sales promotions are well known for creating potential problems because existing clients feel annoyed that they’d paid more previously (they feel ripped off) and all clients will feel the same way down the track when you want to charge the normal price again (they'll think 'how come they could afford to charge us only half price before?').
Given it's all about 'value' there are other ways to make your service more attractive to customers. This is where it's hard to give advice without more details on your business… but… instead of reducing price per se you can offer a different form of service, with a different name (”the Recession Special”), which you can 'sell' as being for the 'budget conscious' and ensure it is perceived as not being your standard service - that way your overall image doesn't suffer. Or, you can provide extra benefits to customers so they get twice as much value for the same price (same net result as your half price idea).
Whatever you decide, keep your overall image and the long term in mind.