Clearview National January 2016 - Issue 170 | Page 25

INDUSTRYNEWS

Why you shouldn’t
compete on price
Ben Dyer, CEO of tradepeople’s app company
Powered Now, gives Clearview his views on pricing jobs.
It’s obvious
The Dacia Sandero costs £6,000. It’s the
UK’s cheapest new car. The Renault Twizy
comes in at under £7,000, a respectable
second.
Now it seems obvious to me, but if
price was everything, no other new cars
would be sold in Britain. But the successful
companies of recent years include Mercedes
and BMW, not noted for being cheap.
The conclusion is inescapable – price isn’t
everything. Of course, that doesn’t mean
that price doesn’t matter, but it should never
be your major competitive weapon. The
road to ruin is claiming to beat anyone on
price.
Cost leadership
Local shops are now an endangered
species following the rise of supermarkets.
The reason the supermarkets have won is
their vast economies of scale. By buying
in bulk and distributing right across the
country they put the screws on supplier’s
prices. This not only reduced the supplier’s
margins, it forced them to become more
efficient. This gave the supermarkets a big
cost advantage.
Against this, you have to ask what cost
advantage you have against your local
competition, because without it, competing
on price doesn’t make sense.
Of course you can beat everyone else’s
prices with no inherent cost advantage. You
just have to pay yourself virtually nothing,
or do the most slapdash job you can.
Neither of these are either sustainable
or enjoyable. That is unless you thrive on
disputes with customers, non-payment and
run-ins with trading standards while never
getting any word-of-mouth wo