Common business owners know if they set prices too high their products or services won’t sell.
But what about setting costs too low?
A business owner trained in estimating cost to quality differences may be biased by low-priced products as being low quality. Lower prices cause consumers to believe they either don’t offer quality services or are cutting costs to make up for the loss. When something costs below market average, customers may ask themselves, “What’s wrong with it?” higher prices generally causes them to assume that it’s a higher quality product or service. But many times taking a chance on a smaller company can yield greater returns in the long run.
Here are a few reasons businesses set lower prices on valuable products or services.
- The company believes highly in the worth of their services and confident that given a chance, customers will see its value.
- The service can be rendered at a better rate and value due to the company’s innovation or use of cost-cutting techniques.
- The company may deliver a necessary component provided by their software rather than requiring customers to purchase an unnecessary software suite or licensed business package costing thousands of dollars.
Computer software is flooded with low-cost and free options, making it difficult for the novice buyer to separate the quality from the quantity. Many business owners are experts in their chosen fields: business, gaming, healthcare, etc. Most owners are not computer professionals and do not have access to the latest trends in software or business innovations. Running a successful business is about getting the most value for the lowest cost to the company bottom line. Revenue expenditures based on brand names or previous business history alone offer no chance for innovation or discovery of more cost-efficient alternatives.
Giving a smaller company a chance by evaluating lower priced software or services may yield the greatest returns with the lowest risk and cost to your company. Many companies like ClicData offer lower cost and free services that can benefit your customers while saving you time and money.