272: How to not compete on price again

272: How to not compete on price again
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Competing on price is a race to the bottom. When customers call, you tell them what your price is and they can either decline or accept. There’s no negotiation, no beating you up. Enough of them will accept that you can build a sustainable business and a scalable business. So how do you make this happen? How do you avoid competing on price?

The answer is speed. When all of your competitors aren’t able to fit customers in until next week or the week after that, you can deliver this week. If all of your competitors are two to three days out, you can fit an appointment in today. The on-demand economy is taking over. Customers are getting less and less patient. They want what they need to be done right now. They don’t want you to be there later this week or the week after that. That’s not going to cut it. When you can deliver quickly, you can name your price and you can often charge double. So why then are so many services not available for two weeks or three weeks? Why is there still such a huge gap in lead time in almost every service business? And the answer is that companies aren’t willing to take the risk. They aren’t willing to risk an employee sitting idle or resources going unused. They aren’t willing to speed up their investments in their business. So make the investment, take the risk.

Let’s talk about what I’m recommending right here. Make speed your competitive advantage. When you can say you’ll be there later that day or start tomorrow, you can name your price. There’s significant value in that. You’ll be able to charge more money and you’ll be able to operate at a higher margin.

Another tip is to get so good at analyzing your data and forecasting demand that you’re available tomorrow and none of your employees sit idle. This is the goal. That’s how you gain a massive competitive advantage. And you never have to compete on price.

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I started the Sweaty Startup in December of 2018 because I believe the Shark Tank and Tech Crunch culture is ruining the real spirit of low-risk entrepreneurship.