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How To Cost Less Without Lowering Your Price

IMB_saleimage Do you know how much your product or service costs? Hint: it's not the price you are asking for it. In global warming terms, environmental cost is commonly referred to as a "footprint." Most people understand that an environmental footprint of a product or company isn't just about the manufacturing, but also the process of shipping, importing, exporting, packaging, and eventually even the use of that product.

When it comes to how much you cost – why not think of your business that way? Your real cost to your customers isn't just the product they buy or the service they use. It's the time they need to spend waiting in line to get it. It's the effort that it takes to load it into their car. It's all the fields they need to fill out online in order to get a "free" username and account. It's the number of times you force them to change their password and remember a new one in the name of security. These are all costs. Not in terms of dollars, but in terms of time.

How can you cost less without lowering your price? Lower the time that it takes for your customers to interact with you.
Make buying easier and faster. Let them go for longer without seeing you. Sometimes, the less interaction you force a customer to have with you, the more satisfied they are. Here's a good example – over time, people are more likely to love their car if they have never gone into the dealer to get it fixed … not because they got an extra $1000 cash back when they bought it. So forget about lower your prices in a recession or trying the "two-for-one-special" mode of thinking. Focus on being easier to do business with and take less time from your customers' schedule. It will pay off.

16 thoughts on “How To Cost Less Without Lowering Your Price”

  1. Quite simply provide value! Lowering the price of an item and buying more, whether its labor or a physical item, does not always make it a value and in many cases makes the overall TCO (total cost of ownership) much higher in the long run.

    Reply
  2. I think a good follow up to this post would be to prove to customers how your product/service will cost them less in the long run.

    Comparisons to cheaper alternatives and the examples of how you make your customers lives easier in a meaningful way would be a good way to communicate this strategy.

    This is a great topic especially when it every other company is out there talking about economizing. I like value-maximizing better.

    Reply
  3. I believe that the concept of reducing interaction between you and the customer is key because this means that the product is one of quality. However, no matter how well the product is manufactured, there should always be a solid customer service base to support them. The key idea to take away from this article is simply: quality over quantity.

    Reply
  4. I believe that the concept of reducing interaction between you and the customer is key because this means that the product is one of quality. However, no matter how well the product is manufactured, there should always be a solid customer service base to support them. The key idea to take away from this article is simply: quality over quantity.

    Reply
  5. On a similar note, WSJ has a terrific supplement on Friday highlighting 5-6 businesses that are doing well in their industries despite the downturn. The strategies each business adapted were interesting. They worked right now, but its hard to measure the long-term ramifications on their brand once the economy picks up.

    Reply
  6. Hi, the post you wrote is quite interesting. I even I do agree that time factor in receiving a service or for that matter a product is an essential attribute.In this competitive world every company is offering the products of same quality as their competitors, so the one of the ways to have competitive advantage is their management of time factor.

    Reply
  7. Well said, Rohit.

    I find that delivering a quality service to a client in the least amount of time necessary to do so not only signals your respect for the value of their time, but also shows confidence in the quality of service being delivered.

    I’ve seen many firms make the mistake of smothering a client in hopes of convincing them of their superiority to the competition. Unfortunately, this often has the opposite effect.

    Reply
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    Reply
  9. اغاني راب
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    Reply
  10. I am a firm believer in “less is more.” I often take myself off email lists I have subscribed to if I am bombarded with emails everyday that remind me of the same sales or deals they currently have. Even if I love the brand/company I just don’t need the same (or almost the same) email everyday. I agree that it is important to have a solid customer service base but it should be a type of customer service base that customers can reach at their own convenience and reach without having to press 100 buttons on your phone and be on hold for 20 minutes. I also think that even though we are having a tough time in the economy that people still really appreciate value and recognize that spending a little more money upfront on a quality product can save them money in the long run. It may be tougher to convince people of this but this positioning is still valuable and can still pay off in today’s economy. Great Post!

    Reply
  11. True the cost of doing business must be brought down. That should be true of whatever times we are in, recession or boom.
    At this point the cost of bringing down prices through cost reduction or taking a hit on profits is relevant. A 10% cut in prices may be more effective than a one for one offer. Maintaining sales levels is a problem.

    Reply

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In addition to Non-Obvious Thinking, Rohit is the author of 10 books on trends, the future of business, building a more human brand with storytelling and how to create a more diverse and inclusive world.

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