with many of us dealing with “half pricers” out there in our market
(which is only addressing operations and field wages and leaving out: pre tax net profit 15%, sales and marketing/mktg labor 10-15%, Administration and finance expense and labor 10-20%, mgmt labor up to 15% which is really ignoring the business necessity of these in the form of “free labor” from ourselves, spouse or other family member/relative)
nice post today from Seth Godin for those who are tempted to spiral to the bottom in their rates for market share
The tragedy of the last 10%
In a competitive market, if you do the work to lower your price by 10%, your market share grows.
If you dig in deep, analyze, reengineer and make thoughtful changes, you can lower your price another 10%. This leads to an even bigger jump in market share.
The third time (or maybe the fourth, or even before then), you only achieve a 10% savings by cutting safety, or quality, or reliability. You cut corners, certainly.
The last 10% costs your workers the chance to make a decent living, it costs your suppliers the opportunity to treat their people with dignity, and it costs you your reputation.
The last 10% isn’t worth it.
We’re not going to remember how cheap you were. We’re going to remember that you let us down.
one does well to ask what type of market share are they really getting when the rates are lowered and lowered again?
