Today I spoke at a meeting of the North Carolina Door and Hardware Association. As with all those in the construction industry, these business owners have been especially hit with the current economic downturn.
And these businesses are feeling deep cuts both in the quantity of jobs – and their profitability. Firms and individuals have come in from other areas and other disciplines with predatory price tactics. As buyers shift to the “low-cost provider”, considerations like quality, service, and even safety are compromised.
In the face of these pressures, some owners spoke up over the need to “re-educate” buyers and get back to basics. “We have spoiled our customers by constant quick service and free consulting. This was fine when margins were solid but now we can no longer operate at this level – and cut our prices.”
Solutions presented were a low-cost, no-frills offer (one drop-ship, no change orders or consultation) with value-added services being added in as needed. Some businesses had shifted to new defined niches where they had a real price and delivery advantage.
But the final conclusion was that price-cutting, especially now would be not only unwise, but possibly catastrophic.
What are you doing to prop up price?