Do you want to offer a cheap and affordable service or product? If so, you may first want to know the difference between the two.
Entrepreneurs are frequently concerned about their product's pricing in relation to the competition. They'll research the market to see what others are charging and set their price accordingly. Because they want to stay competitive and make sure that their price isn't a barrier for prospective consumers, they've decided to do this.
Customers are constantly on the lookout for ways to cut costs, so they only avail services from enterprises that offer the best deals. Potential customers may be attracted to your products and/or services because of many reasons such as its competitive lowered prices and unique features.
However, one of the biggest questions that small businesses must ask themselves is “are my products affordable or simply cheap?” As similar as the adjectives might sound and are sometimes interchangeable, they may not always imply the same meaning. To iterate on this further, let’s look at what these two words mean for a small business and start-up.
Affordable with High Quality Features
Customers are often drawn toward products/services that are within their budget. While offering your products/services is subjective to others in comparison, the general code of understanding is that affordability most certainly does not compromise on quality features.
For example, it is a well-known fact that there is a mighty difference in experience between an iOS and Android device. Besides the obvious fact that iOS may provide better features than Android, the truth is that the latter is fairly more consumed by the masses than iOS is. If an iOS product was ‘affordable’ as much as an Android was, we know how much a dramatic shift in preferences there would be.
Psychologically, most of us are wired to believe that the more expensive a product/service is, the better it would be. But the reality is that the majority of the global population belongs to the middle social class, making it hard to promote expensive products to this section of the hierarchy.
For a small business/start-up like yours, it makes sense to offer your services at an ‘affordable’ price. Offering an ‘affordable’ service may mean that your marketing strategies must immediately shout ‘YOU CAN TRUST US’.
Of course, offering a service in a niche is the subject. But we would like to believe that the general rule of thumb is to ensure that your customers WANT to “invest” in your business through subscription because they believe what you’re offering is what they need. In other words, quality features at an affordable price. So, when do products become cheap?
Cheap may not always be the best
Lowering the prices of products and services is a common strategy for people who want to get more sales. While lowering prices can be a winning strategy at times, it’s not without its pitfalls. The oldest pricing strategy is to keep prices low in order to increase sales; the laws of economic principles dictate that as prices are lowered, so too will sales be.
As a result, low prices are a common strategy for companies looking to gain market share or expand into new markets. How do you know when you crossed the line? When does a low price signal a lack of value? Many factors come into play, making this an extremely difficult balancing act.
Customers are more likely to have issues with the products that have little or no trust in the brands. Low-cost pricing can be harmful to the long-term success of small businesses and startups. Unless your prices are low enough to compete, customers will stop paying attention to you and instead turn to a larger, more well-established competitor.
If you lower your prices, your brand may be perceived as low-quality or cheap. Again, you can get away with it on special occasions. As a bonus, some companies actually want to be known as the cheapest option.
But if you want your brand to be associated with quality, uniqueness, premium, or class, you must carefully evaluate whether or not reducing prices will harm your overall image of the business.
-Blog written by Vinit Singh Baghel