Price Match promise - your thoughts?

[CableGuy]

Hi all,

One of our competitors has started selling some of our bestsellers at a lower price than ours.

We're regarded as a premium retailer of our products, so I don't want to have a knee jerk reaction and instantly reduce our prices on everything. Once the retail price is lowered, it rarely ever goes back up in our game.

After a week of this our sales have been hit slightly I feel. So I was thinking that perhaps we could offer a price match promise - offering to match the price (excluding the usual eBay sellers etc) as well as throwing in a freebie.

Customers are forever telling us that they'd prefer to buy from us than our competitors, yet in these times they are naturally buying on more than just service - price is part of the equation and we want to offer good value.

What are your thoughts on a price match promise? Is it worth it or do you think it'll be overlooked?

 

[Morgy]

Do price matches work?
If I see the same product cheaper elsewhere I will buy it elsewhere.
I wouldn't waste my time going back to you to get it for the same price as I could get it elsewhere, I just think you were trying to screw me the first time by having the higher price.

 

[Barnie]

why not email all your customers with a promotional code

retail price stays the same but you keep your customers happy

 

[CableGuy]

Do price matches work?
If I see the same product cheaper elsewhere I will buy it elsewhere.
I wouldn't waste my time going back to you to get it for the same price as I could get it elsewhere, I just think you were trying to screw me the first time by having the higher price.

Valid point.

But sometimes customers may want to buy from a certain retailer because of the customer service, free delivery, after sales support etc?

 

[CableGuy]

why not email all your customers with a promotional code

retail price stays the same but you keep your customers happy

We do this also, but 50% of our existing customers probably aren't signed up to our mailing list.

However, 75% of our customers are first time buyers but may have heard about our reputation though friends, family or web forums etc.

 

[Morgy]

I agree, but it would depend on the product.
Free Delivery - that would come into my equation of who is cheaper.
After sales support - the product will be under warranty.

I understand it is a hard one to call. What about a promotion so people realise it won't be that cheap forever? Then this will allow you to up your price when you want.

How is the other business selling it cheaper? Are they getting it cheaper?

 

[CableGuy]

I agree, but it would depend on the product.
Free Delivery - that would come into my equation of who is cheaper.
After sales support - the product will be under warranty.

I understand it is a hard one to call. What about a promotion so people realise it won't be that cheap forever? Then this will allow you to up your price when you want.

How is the other business selling it cheaper? Are they getting it cheaper?

Our product is pretty technical so after-sales is important. As for the warranty, the manufacturer will always direct you to where you purchased from, so again it's important to the customer.

Our competitor is actually running a 'limited time' promotion; problem is that others by this point have also reduced their prices, pushing down margins making it difficult to bring them back up in line with where they should be.

They're selling cheaper simply by cutting their already low margins. Price is the easiest thing in the world to cut, but it's not sustainable to use it as the only driver of business as some fool will always be content selling on eBay, probably on the side, and making 50p on each item to save for their next holiday to Benidorm

If we wanted to be, we could easily be the cheapest as we buy direct, however, we represent some big brands and these products are worth their price. It'd be like selling a Aston Martin for the price of a Ford...

 

[Morgy]

If after sales support is important, then people will see the error of their ways and come back to you if the other outfit doesn't have a good after sales support.. How often are these products bough by the same customer?

 

[CableGuy]

If after sales support is important, then people will see the error of their ways and come back to you if the other outfit doesn't have a good after sales support.. How often are these products bough by the same customer?

That's true. However, this is a product that may only be purchased every few years, so ideally we'd like to convert a few more customers over now and save them

 

[Bruce_Andrews]

Try some price modelling.
Do your first time buyers only buy one item?
If not, can you move pricing to give the same overall gross profit (GP).
Look at GP pounds as well as percentages.
If the first time buyers are coming from recommendation, can you incentivise this? - but base the incentives on higher GP products.
Can you bundle the discounted lines with other products?
Are they exactly the same product? - can you offer a better quality product, and therefore justify the higher price?

 

[Cornishtiger]

It simple as far as I can see. How many sales have you lost? How much profit is that? Work out the loss of profit if you discounted every sale between now and the end of your competitors promotion. If I was you and I could afford it I would beat here price and keep beating it until they went away, but I am a tough old bugger.

 

[david_godwin99]

Price matches are worth it so long as you are in the right market, b2c - wouldnt bother with it unless its high end goods (TVs etc). But if you are B2B - go for it.

Depending on your business, remember we are in a very price orientated market at the moment and therefore if there is room to adjust your prices slightly then obviously offering a good price to all is better, but also remember that if that squeezes your margins it probably does the same to any competition too so let them operate on a no margin with more customers (more stress) whilst you soak up more profit for less work.

Good luck