Jun
27
11:15 AM
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topics:
Business
It's not that my prices are good. It's the other prices that are bad.
This is a quote I recently read on Michael Masterson's blog at Early To Rise. It struck home as I was thinking much the same thing about our industry and the course we have chosen to take.
Last fall the recession hit home. Our business dried up and we were on the verge of going under. We took quick and drastic action to keep things going. It was imperative that we continue to keep afloat and be able to service our existing customers.
The first thing we had to do was to cut costs. We had to let go of those who cost us the most money and cut out everything that was unnecessary. This slowed the down slide but didn't stop it.
Next we cut our rates almost in half. I thought this to be a temporary thing. We were still charging less than our competition who did the same thing we did. But with the cut in costs we could charge even less.
Then the recovery began. With our prices set at half of our competition, the sales process became easy. Customer satisfaction rose. Business began to come in.
What really surprised me... our profits skyrocketed. Until we made the price change we hovered just barely in the black for 5 straight years and in the red the 6th. You would think that lowering our prices would make this worse. But when coupled with the lower costs, it made a huge difference. Not only that, we were spending less time on the sales process and on managing client expectations and satisfaction.
I was thinking of raising our prices again, now that the economy is improving. But this near catastrophic event in our business has actually made us stronger. Like a flame to ore, we have created a hardened metal that can perform better for us and our clients.
What I found is that the industry is charging too much.
And I intend to show people they don't have to pay a premium to get great custom software solutions to run their business.
Last fall the recession hit home. Our business dried up and we were on the verge of going under. We took quick and drastic action to keep things going. It was imperative that we continue to keep afloat and be able to service our existing customers.
The first thing we had to do was to cut costs. We had to let go of those who cost us the most money and cut out everything that was unnecessary. This slowed the down slide but didn't stop it.
Next we cut our rates almost in half. I thought this to be a temporary thing. We were still charging less than our competition who did the same thing we did. But with the cut in costs we could charge even less.
Then the recovery began. With our prices set at half of our competition, the sales process became easy. Customer satisfaction rose. Business began to come in.
What really surprised me... our profits skyrocketed. Until we made the price change we hovered just barely in the black for 5 straight years and in the red the 6th. You would think that lowering our prices would make this worse. But when coupled with the lower costs, it made a huge difference. Not only that, we were spending less time on the sales process and on managing client expectations and satisfaction.
I was thinking of raising our prices again, now that the economy is improving. But this near catastrophic event in our business has actually made us stronger. Like a flame to ore, we have created a hardened metal that can perform better for us and our clients.
What I found is that the industry is charging too much.
And I intend to show people they don't have to pay a premium to get great custom software solutions to run their business.
Posted By Aaron Bono
