Pricing strategies for hard times

This year has been a learning experience for me as a consumer and as a small business owner.

As a consumer:

As a consumer with less money to spend, I find that my buying habits have changed significantly. I am switching to cheaper alternatives in many areas: Internet phone service instead of regular land line telephone; less expensive cell phone plans; store brands at the supermarkets and specials instead of the brands we used to buy.

Many purchases have been put on hold: clothing purchases; household construction projects; landscaping projects; auto tune-ups;

Trips to nearby cities for supplies are carefully scheduled so they are kept to a minimum.

Small purchases for entertainment continue, but the outlay is greatly reduced. If we eat out while on a shopping expedition, it is more likely to be at Subway than Applebys and a regular coffee instead of a latte from Starbucks.

I borrow tools for short projects where I used to buy them to add to my collection.

We shop online for everything we cannot buy in our local stores.

We look for opportunities to barter whenever possible.

In short, we look for special deals in almost every transaction and do not buy until we find a seller that is willing to give us a price that makes us feel satisfied with the opportunity. Spending money has become painful and it takes a special deal to make buying something satisfying.

As a small business owner:

As a small business owner selling services and products to people who are hurting for money, I have not found much useful advice in the various online forums I follow. The usual advice is to increase my level of advertising and promotion and there is a shortage of strategies for pricing to suit hard times. Promising the same services to more people does not seem to address what consumers are experiencing need and want.

As a consumer, I find myself ignoring advertising except for things I really need at a price that I can't refuse. If my disposable income is at a rock-bottom low, my attention goes to those offerings that will provide me with things I really need at prices that make me feel comfortable buying them. I am not attracted to off-brands at low prices, but to known brands that are being offered at savings that can't be resisted.

If there is a rational reason that the goods are being sold at very low prices, it sweetens the deal for me as a consumer. Overstocks, special buys, and closeouts offer a chance to get needed products of standard quality at prices far below normal.

As a small business owner, I have been experimenting with ways to extend my line of products and services so that I offer limited specials at irresistible prices while maintaining my ability to produce high end products and services for those customers who need them and can afford them.

The results have been encouraging. I started seeing more business at the low end as soon as I started offering special pricing. Customers have been spreading the word that custom framing is still affordable for those who need it.

The turn-around for me as a business owner came when I started looking at my needs as a consumer. I only buy when there is a compelling reason to purchase. I had to give my customers the same opportunity.

Has anyone else had a similar experience?

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0 Responses to Pricing strategies for hard times

  1. Mindanao Bob says:

    Hi David – My experience has been the same. My business was way down in my online store. Back in June or July I decided to start offering lower priced goods – a good value for my customers. In the past, I mostly offered Premium goods – very high quality, usually the best available, but with a correspondingly high price. Subsequently, my business started moving back toward the “normal” of a couple years ago. It’s not back 100%, and I have to work harder for what I earn today, but it is much better than it was a few months ago.

    Maybe these economic hard times will teach us all more about value, both in our purchasing habits and our business habits.

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