Competition is tough these days. Consumers and business customers know you have competitors who will charge a lower price. In fact, they don't even have to check.
Customers have learned they can ask you for a lower price and often get it. If you don't offer some kind of concession, a big percentage of your prospects will move on to another business who WILL give them a price cut.
Price cutting is more prevalent in some industries than others. I wouldn't dream of asking my doctor to drop his fee for an office visit, but I wouldn't think twice about asking salesperson at car dealership if they could knock a few hundred off sticker price.
How do you drop your price without losing your profit? I mean, lots of sales are good (which you're likely to get if you drop your prices), but lots of sales that don't make a profit will bankrupt your business in a hurry. Here are a few tips:
1. If you recently dropped your price, point out that cut to customer, then give her an additional 10 percent reduction. Note total amount she is saving over your old price. When economy is tightening and prices are dropping, this strategy can work well for you.
2. Vary amount of price concessions. If you give customer a $20 price cut, don't give her an additional $20 price reduction next time she asks. Your customer will immediately figure she can ask a third time and once again get an additional $20 off. Instead, make your second price reduction $15 or $10. This tends to stave off additional requests.
3. Most times, you already know how much you can drop your price without even being asked. Don't give customer your full price cut first time. Instead, offer them a smaller cut first, then give a little more if they ask for it.