Competition has been defined as a “rivalry between two or more persons or groups for an object desired in common, usually resulting in a victor and a loser but not necessarily involving the destruction of the latter.”
Competition is good for consumers. It stimulates businesses to strive for better customer service and workmanship. But niche-market businesses are finding new competition cropping up, many times with much lower prices.
Don’t respond with panic. Temptation to substantially underbid competitors is very strong. But selling yourself cheap is not the way to retain loyal customers or attract new ones. It’s a delicate balance – you don’t want to be the highest priced business in your market, possibly not getting beyond your estimate, nor do you want to price yourself so low you can’t maintain adequate revenue.
What can you do? First of all, have a realistic understanding of how much your merchandise costs in labor and supplies. Decide on a sales margin that is within range of your competition without sacrificing profit. How do you find out what other businesses are charging for similar goods or services? Use the Internet to research what similar businesses are charging for the same type work. Or call and ask for “ballpark” estimates.
Secondly, don’t base your estimates on the lower end of your competitors’ prices. Most times the lowest estimates are for the minimum quality in supplies and labor. And patrons find they get nickel and dimed for every little addition or change. Base your estimates on the real value of your work while being shrewd about who else is out there selling the same items.
Think about your target customers. What are their current needs? Cutting products and services that are no longer marketable and adding items that are more current can increase give you the edge needed to stand out among your competition without selling yourself cheap.