April 25, 2012Should you compete on price or quality?

When getting to understand a client’s business, I always ask them about their USP (unique selling point). In short, I ask them the same question a potential customer will ask: “why you?”

Sometimes, particularly if their business plan isn’t fully formed, the client won’t know. So I help by saying it’s often one of two things: “are you the best, or are you the cheapest?”

The two types of consumer

There are two types of consumers in the world. There are those who want to minimize their cost no matter what. Then there are those who want to get the best possible service, for the best possible price. That’s where things get tricky.

1. Captain Cheapskate

Captain Cheapskate will always buy from the bargain bucket. Price is his primary consideration, and don’t you know it. He’s the cheapskate who won’t pay his freelancer more than £10 an hour. He’s the guy who buys catalogue flatpack furniture that breaks and needs replacing every year.

And the truth is, unless you are a bargain bucket operation, you do not want his custom.

Captain Cheapskate is not a loyal customer. He will blame you for doing a half-hearted job. He will blame the quality of your materials for his furniture breaking, and when he has to replace it (or replace you), he will shop elsewhere, always searching for that elusive Loch Ness Monster: the amazing product at a rock bottom price. He seems to never learn that you get what you pay for.

  • He will never be loyal to your brand.
  • He will never tell his friends about how great your product is.
  • He will move on, blaming you.

Forget about him. He isn’t worth your time.

2. The discerning customer

I keep quoting Ogilvy — “the consumer is not a moron”. And, unless you’re dealing with Captain Cheapskate, he (or she) is not. Most people want the very best quality they can get at the very best price they can afford. As I said before, that’s where things start to get tricky.

Everyone has a different idea of what their “best price” is.

Removing this image, without changing my price, increased my conversion rate.

I recently underwent laser eye surgery. There are three major providers in the UK, Optimax, Optical Express, and Ultralase. When I went for my consultation at Optimax, everything about them screamed cheap — but I think it was the stack’em’high boxes of eye drops being sold in the foyer at £5 a pop that really put me off. I was really worried about dry eye syndrome, and this made me even more worried. At Ultralase, the eye drops were guaranteed free for life.

So was it really a £5 box of eye drops that put me off the cost of a £2000 surgery? Yes and no. Ultralase simply made me feel more confident. But when making my final decision, little things like this all served to help me make up my mind.

Even if you’re not cheap, giving away the impression that you are can have disastrous results. I discovered this when my conversion rate increased after I took away a few “price sensitive” sales points, such as the “gift tag with price on it” graphic from my intro page — despite my basic price point remaining the same.

So how do you attract the discerning customer? Simple:

You aim to be the best, not the cheapest, but the best.

But “best” doesn’t mean the most expensive.

I often get enquiries that begin with the phrase “we are a start up” and end with “we are on a small budget”. My immediate thoughts are this:

  1. It’s the most passive-aggressive way of asking for a discount possible. This is a business, not a charity. You may be invested in making your business succeed, but I am just doing a job.
  2. You’re not interested in quality. You’re only interested in price. Sure, you still want “the best possible” but only if it’s for “the lowest amount of money”.

I think I attract enquiries like this because clients see the quality of my work and the brands I’ve worked with and want the best for their business — unfortunately, they don’t always have the ability to pay for it.

Do they want me to do my best work for half pay, or do they want me to do a half-arsed job for half money? Either way, as a perfectionist, I have to say no.

It’s not easy to sort one type of customer out from the other. There’s always a compromise to be struck between price and quality.

“Reassuringly expensive” – a strapline that always works.

In the long run, though, it’s better to compete on quality rather than price, as a competition on price is always a race to the bottom — reducing profitability, reducing customer loyalty, and reducing service quality.

I pride myself on making relatively few mistakes as a copywriter, but my greatest mistake when starting out was my focus on competing on price, both in my own business and in the direction I recommended to my customers.

Hard experience has taught me that the provision of quality products and service is a long-term strategy, while aggressive discounting and bargain bucket merchandising is a fly-by-night flash-in-the-pan.

If you’re in business for the long game, choose quality over price every time.

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This entry was posted on Wednesday, April 25th, 2012 at 2:11 pm and is filed under Blog, Copywriting, Me and my business. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.

One comment

  1. simone says:

    Spot on! I’m still gritting my teeth at the great rate a past client got by haggling as hard as if we were standing in a sunny souk instead than under a lead sky threatening rain.

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