Let’s talk about predatory pricing. This pricing strategy is becoming a more common tactic for new businesses and freelancers who are just starting out. Although it’s easy to want to do whatever you can to gain clients, charging stupidly low prices just isn’t the answer and ultimately doesn’t benefit the consumer or the business in the long run.
I keep seeing so many people offering marketing and social media services for lucratively low prices online. Being so public about having such low prices can plant a seed into a consumer’s head and lead them to believe that £10 is an acceptable price to pay to have a five minute IGTV video filmed. If your competitors get hold of your prices then they might be tempted to charge even less than you are. This. Undercuts. Everyone. In. The. Industry.
Why is this this ‘strategy’ so damaging?
When companies undercut other people in their industry and offer dramatically low prices, chances are the only reason they can afford to charge so little is because they’re providing people with a sub-standard service. The consumer may be getting a cheap deal but they’re more than likely not paying for a high quality service.
The sad reality is that if you’re paying for a service and the price seems too good to be true then it probably is.
The freelancers and businesses
As soon as people start undercutting others, people and businesses who may be highly skilled and have years of experience will end up losing clients and money. This is damaging to these people as consumers are often tempted by predatory pricing tactics and ridiculously low prices. Try to remember that behind any freelancer or business that’s worth their money is a person or team of people that have invested time and money learning how to become good at what they do and provide the best possible service.
The businesses offering predatory prices
People that use this pricing strategy won’t make any real money or have any good chances of client retention in the long run. People will soon realise that the prices that these businesses are charging reflect their inexperience or the lack of quality in the service they’re offering.
I actually came across a marketer on Instagram the other day who was offering 60 day social media content plans for £20 for businesses. If you’re thinking of offering prices like this then either:
A) You’re charging a lot less than what your product or service is worth. Do some market research and talk to people in your industry to get a feel for what your work is actually worth – it’s probably worth quite a bit more than you think it is. For example, if you’re selling handmade Christmas cards, have a scroll through Etsy to make sure you’re not charging too little for your items compared to everyone else. If someone questions your pricing or tells you that you’re too expensive, feel free to kindly explain to them that they get the quality they pay for. Know your worth, girl!
B) The product or service that you’re offering isn’t very good and is a reflection of your pricing. I’m not saying this to be mean or because I don’t want your business to be profitable. I’m saying this because it’s not fair to sell sub-standard products to people. If you think that your work isn’t worth very much then your next move should be to ask yourself why this is. Identify what you need to do to improve the service or product you’re offering and then value your business enough to charge an appropriate price.
As always, thank you for reading!
I’m curious – let me know your opinions on this pricing strategy in the comments.
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Bye for now,