How do you compete on price?

It’s said that trying to compete on price is a race to the bottom:  No matter how low you go, someone is willing to go a bit lower until you’re all out of business.

So how do you compete when someone is offering deep discounts?

Last week, Liza asked the question

How about those new business owners who try to lure your clients away with “super-low discounted prices!” Many of them go out of business themselves down the line…but I hate losing any clients even temporarily and cannot lower prices and stay viable myself!

This is a situation we all find ourselves in, and the solution is always the same.

But first, a story

Once upon a time, I relocated from a big city to a small city.  I had a great hair stylist in the big city  She knew exactly how to cut my hair to make it look fabulous.  She cut, she layered, and she could get volume where none had before.  She was a god of hair.  She was very expensive.  She was worth every penny.

After relocating, I spent 4 years bouncing from stylist to stylist trying to find someone who could do more than just offer a bob or a perm.  Thank the heavens I worked in an engineering facility where no one really noticed how bad my hair looked.  Some of the cuts were cheap, some were expensive, but they all sucked.

Then I sat in a meeting with the most awesome hair I’d seen in 4 years.  I, of course, begged for the name of her stylist.  His name was Dennis.  He owned a salon downtown and he was probably one of the more expensive stylists in town.  He was magic!  Within a couple of cuts, I felt like I was reborn.  I loved my hair.  I used the products he recommended.  I came back every 6 weeks.  He was worth every penny.

You can be very successful without having the lowest prices

Dennis and I talked during my visits and many of our conversations revolved around owning a business.  I got a lot of amazing advice from Dennis, some of which was around pricing.  He had been styling hair since 1964, so he knew what he was talking about.

There will always be customers who buy on price, alone

The only way to get these customers is to be the lowest price.  Unfortunately, as soon as a competitor offers a lower price, they’re gone.  You don’t want these customers.

There are customers who equate price with quality

There is a strange psychology around price.  Most people won’t buy the cheapest because they assume the quality must be so bad the only way to sell it is to lower the price.

When you are one of the more expensive in town, people assume you must be very good and are more likely to trust you and make the initial purchase.  When you are the most expensive in town, you will hit the resistance of ‘not worth the extra money’ and your client base will be smaller.

There is a sweet spot in the middle.  Those customers want the best value for their money and they know that high quality costs a bit more and they are willing to pay for it.  These are the customers you want.

The solution is simple:  Don’t Compete on Price

In the salon business, there exists everything from Supercuts (Haircuts for under $10) to the superstars (Haircuts for over $200).  Most towns can support a couple of the Supercuts and many more independent stylists charging from $35 to $70 a cut.  That’s the sweet spot.

What you really have to offer

You’re not selling just the act of massage.  Dennis didn’t just cut my hair.  He spent the full hour with me.  I was offered coffee or ice water.  There were no screaming babies.  The décor was sophisticated and tasteful.  I never felt rushed.  He fussed, he mussed, he spritzed until my hair was photo ready.  I was getting a salon experience.

You need to determine your USP

What’s a USP, you ask?  It’s your Unique Selling Proposition.  It’s how you differentiate your massage from everyone else’s.  I’m going to take a big personal risk of pissing a lot of massage therapists off, but I need to tell you a little secret in order to help you formulate a successful USP.  You might want to brace yourself, take your heart medicine, get the Life Alert handy.  Ready?

To most of the buying public, a massage is a massage.

They see no difference between you and the unlicensed foot massage place down the street.  They don’t know Swedish from Russian, Rolfing from Reflexology and, frankly, they don’t really care!

You are not selling massage!

I can’t say that often enough so I’m going to repeat it:  You are not selling massage.  You are selling: pain relief, better race times, fun, youthfulness, beauty, better performance, increased productivity, health, a longer life.  But, you are not selling massage.

Quit marketing your massage techniques

All you are doing is selling to other massage therapists.  Don’t believe me?  Here’s an example:

“The following techniques are just some of the services that we provide here at our facility:

• Trigger Point
• Swedish
• Deep Tissue
• Sports
• Reflexology
• Cranial Sacral

Here’s another example:

• Combo or DVD+RW Drive  – 8X Slot Load CD/DVD Burner (Dual Layer DVD+/-R Drive)
• Memory – 3GB Shared Dual Channel DDR3 at 1066MHz
• Hard Drive – 250GB SATA Hard Drive (7200RPM)

Do you know what any of that means?  No.  And your clients don’t understand any of your technique list either.

So how do you determine your USP?  Ask your best clients what sets you apart. Do you have more experience that anyone in town?  That’s a good USP because no one else can copy it.  Do you specialize in a specific injury or population?  Pregnancy?  PTSD?  Cancer patients?  High level executives?  Those are unique niches that customers can understand.  That’s what differentiates you.

So, Liza, one thing you can do is start looking at what makes a massage with you unique and special.  What sets you apart from the new massage therapists trying to undercut you on price.  Here’s a hint:  you’ve been doing this a while and know what you’re doing.  Your experience means better results in fewer visits; more gain, less pain. You can also offer an assurance that you’ll be in business next year.  Reliable.  Consistent. Efficient.  I want you to get out a piece of paper and write down all the things that make your massage special.

• Environment – a pretty place in the country or conveniently located to their office?
• Experience – small touches that might set you apart.  Are you in with other, complementary health care providers?  Do they get a mint at the end of the massage?
• Effectiveness – what problem can you solve for them and how quickly can you solve it?

Look outside the massage industry for this.  Google salons in your town and research how they are marketing themselves.  You know who is the best, cheapest, or priciest.  See how they position themselves and do something similar.

This post simply got to be too long, so I’ve broken it up into several posts.  We’ll explore more marketing techniques, pricing, discounting, and packages in the future.  In the meantime,

Can we help Liza with ideas for developing her Unique Selling Proposition?  How did you come up with yours?