Something which has always been a tricky thing to balance is to how companies go about positioning their costs against their competitors.
For differentiating themselves by way of quality, obviously their costs tend to reflect this. For the majority of companies, they tend to position themselves as “competitive” rather than the cheapest.
We at SalesFirst are used to working across a range of industries, many of which come up against “one-man bands” who, by having a very limited cost base, manage to undercut more established companies.
Positioning yourself as competitive, perhaps even targeting prospects on the proviso that their costs can be reduced by X%, is obviously an reasonbly attractive to companies looking to cut costs. We find, however, that there isn’t a hard and fast rule about where it is appropriate and, it you are significantly reducing your profit margins simply to win business, it is not a recipe for retaining long-term business (they are likely to be swayed by the next company selling on price).
As a rule, for truly profitable business, we feel that a good-quality, reasonably priced offering which gives the prospect comfort and assurance that a long-term relationship can be fostered is the best approach. Of course, for those wanting quick volume then by all means adopt a different cost position but also be wary of being “busy fools” and quoting for lots of work which just enables prospects to beat up their existing suppliers on price!!!