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The Real Consequences of Lowering Prices

For most, this was not a great year, business-wise. My expectations were much higher, but they got well and duly flattened by forces beyond my control. The little siren call starts when this happens: should I have asked for less? Will I fare better if I do so in the future?

Unsurprisingly, I’d say no. Here are the 4 most important reasons why I will not do so myself:

And people

Recursive problem: getting less cash in hand per client means I would need more clients than before to get the same goals when a low number of clients was the problem I was trying to solve.

Positioning erosion: a lower price point might shift who clients tend to compare me with, painting me as a high-cost mid-tier solution, rather than a mid-cost high-tier solution that I want to be seen as. This could lower the effectiveness of my marketing and cost sales.

Telltale signal: reducing prices can be seen by clients as me being in a hurry to close a deal, signaling clients use that in negotiations, or to wait for a higher level of desperation in the future.

Anchoring trouble: both new and old clients could now “anchor” their perception of my new price as “normal”, and therefore see the later return to a regular full price as a “price increase”. That’s an uphill battle that I would like to avoid.

Price drops are a seductive path that often leads to a mirage.

Keep the conversation on value, not price.

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