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    Need help with problem re underpricing
    #1
    Roxanne Guest
    I have made a grave error.

    I am interested in starting a small service in my neighborhood house and pet sitting. Unfortunately, the only price information I found was for another area, and even though I upped my prices for the area where I live, I was contacted by someone sho saw my flier on the very first day I handed them out telling me I was seriously undercutting the local rate (she also provides this service). That was not my intention. I'd love to be charging what she's getting.

    The problem is, I placed almost 100 fliers around my immediate neighborhood with a rate schedule on the back. How can I handle this problem. If all else fails, I will not offer my services in this area.

    Anyone who has any advice, I'd appreciate it. Please don't write and state the obvious (that I should have done more research). I'm looing for a solution.

    Thank you.


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    Not necessarily a grave error
    #2
    GaryT Guest
    I don't think this is necessarily a grave error. It might be in fact, a great way to get business.
    When one is starting up a new business, undercutting prices is a way to attract new business. As long as you are making a sufficient profit to cover your costs and give you a return, then your price works for you.
    Good luck!


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    Re: Introductory rate
    #3
    DiTryin Guest
    Hi Roxanne,

    Tell them it was an "Introductory Rate" That's so common in every business, no one will bat an eye.

    In the future be sure to put "Rates subject to change" across the bottom.

    Diane


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    If your initial rate was good enough for you before you found out what your competition charges, why not keep with that rate for a while until you get more established and then slowly raise your rates?

    The fact that you are "seriously undercutting" the competition may be because your competition had no competition and could charge whatever they wanted. Perhaps they have been seriously overcharging customers because there was no competition to keep them in check.

    If I were you I would keep to my original game plan. If your competition wants to play, they will have to lower their rates to compete and if they don't, then more customers for you.


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    Re: Introductory rate
    Quote Originally Posted by DiTryin
    Hi Roxanne,

    Tell them it was an "Introductory Rate" That's so common in every business, no one will bat an eye.

    In the future be sure to put "Rates subject to change" across the bottom.

    Diane

    Excellent suggestion. I like how you changed the "problem" into a perfectly acceptable situation with a legal tip for next time.


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    I agree with the two comments about your prices not being a problem: if you are that much more affordable, you have just become a serious competition. You will need that edge to find your niche in the market.

    And again, you can always adjust your rates as necessary if you find your expenses are not matched by your fees.

    If I was in your spot, I would see who nibbles at your rates. Perhaps your competition is aiming for the upscale market/client? Perhaps you can offer more economically comfortable services - giving you a broader market base to pull from.

    In either case, I would not react as if you were wrong unless the prices you posted were a true typographical error. I say.. Go for it! and good luck. I hope you have much success.


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    Wow! I find the idea of an "Introduction Rate" a fruitful one, even if the stated rate was not originally meant to be an introduction rate. I may have read too much into the poster's concern, but I sensed the poster may have suffered some hostility from the caller who claimed the poster "undercut" the rates for the area. I found some of that hostility when selling online. I tried to sell three items for the price of one of the same items another seller had for sale. The other seller trumped up some complaints against me, none of which turned out to be true. However, I did get enough grief from contacts that I just pulled my items. I ended up donated the entire box to the Goodwill for a tax write off.


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    What you can do is leverage on that error. You can actually give that lower price to your first few customers and when you reach a certain limit and some other people inquire, you can just simply say that you have already given the opportunity to the first few customers. But you can also tell them that you would do such promotions again later on, so they need to watch out for it. It will actually create excitement among your customers.


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    you can clarify the price and explain that it's grand opening rate, then after several time you can charge normal price


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    Quote Originally Posted by GaryT View Post
    I don't think this is necessarily a grave error. It might be in fact, a great way to get business.
    When one is starting up a new business, undercutting prices is a way to attract new business. As long as you are making a sufficient profit to cover your costs and give you a return, then your price works for you.
    Good luck!
    Thanks for the note. CHeer !


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