A Pricey Strategy for
Question: What's the easiest way to
lose a price battle? Answer: Join the fight.
THE EXECUTIVE EDITOR, Jim Thomas
One of the ageless questions in any industry is,
"How do I compete against businesses that use price as a weapon?"
Judging from the messages sent to OM, many optometrists still struggle with this
challenge as well.
Those first shots in a potential pricing war --
contact lenses below cost, glasses free with eye exams, eye exams free with
glasses, etc. -- can be unnerving. But practice management and business
consultants urge us to leave price clashes to the titans.
"For all but the biggest enterprises,
competing on cost is expensive. For smaller businesses, it's self-destructive
behavior," says Warren D. Miller, M.B.A., co-founder of Beckmill Research.
In her book, How Much Should I Charge, Ellen
Rohr, a columnist for Entrepreneur magazine, warns that the "going
rate" is good for one thing -- "going down the drain."
How to fight price
If you can't cut fees, then how do you compete
against low-price competitors? A transportation executive told me, "I first
imagine that our competitors offer their services below cost, or even at no
cost. Then I ask, 'How can I provide a better value?' If it sounds like an
impossible exercise, think of bottled water; $3,000 T.V.s; and $200 basketball
Most customers see transportation as a commodity
where a company simply moves a package from point A to point B. Yet top
transportation companies break the mold by offering unique value propositions
that are similar to those that successful optometric practices use. For example:
- Both leverage state-of-the-art equipment to
deliver higher levels of service and impress customers.
- Both customize their services to address the
needs of their customers (or patients).
- Both specialize.
- Both rely on highly trained staffs to exceed
Do you really need a bargain?
Is it worth going after the bargain hunters?
According to sales trainer Brian Tracy, 94% of customers mention non-price items
as being the most important single factor in their buying decision. Of those
customers who said they turned down a product because of cost, 68% admitted
later that price wasn't the determining factor. Price was just the easiest way
to turn down the sale.
But I'll keep my mind open. If you've found
success with a low price strategy, share your story with me at firstname.lastname@example.org.
We also welcome the optometrists who are innovators. After all, Optometric
Management depends on you.
Optometric Management, Issue: May 2004