The Worst Business Advice I EVER Got
I recently got some of the worst business advice I think that I’ve ever gotten. It made me kind of chuckle, and it has to do with pricing.
I was in South Florida and we were looking for a place to grab a juice and wrap, or anything healthy.
We ended up in this little shop and there’s this guy that had this hole in the wall place and you could just look at him and know he was not doing so hot. He looked miserable, didn’t have much life in him and if I were to guess, I wouldn’t think his business was doing very well.
But long story short is, we go and we get the juice and it’s really cheaply priced actually.
It’s like $6.00 for a freshly squeezed juice and we could put as much ingredients as we want into it and they squeeze it right there for us.
Most of the juices around here in South Florida are like $10.00 or maybe a little bit more than that.
When I asked about his prices, he said “Yeah, that’s the reason that we’ve been in business so long, is because our prices are so cheap.”
And I thought, “Wow, that kind of sucks.”
I learned this from this brilliant guy who you could call the grandfather of direct response marketing, named Dan Kennedy. He talks about how there’s no point in being the second cheapest.
If you can’t be the absolutely ground dirt cheapest person in the market, then there’s no competitive advantage to being the second cheapest.
Take Wal-Mart for example who is by far the cheapest. They’re way at the ground floor, and then what is there above that? Maybe Kmart and I don’t think that store is doing so hot right now.
The idea is that it makes no sense to just compete with the lowest price, because all you’re going to be doing is making your prices lower and lower until your product or service becomes a commodity.
I was actually recently talking with a guy that’s going to be preparing my taxes and doing my accounting for me and that was one of my things, I was like, “Wow, man, you’re like twice as expensive as the guy that I have doing it right now.”
And he said, “Yeah, we’re not the cheapest, I’m going to tell you we’re not the cheapest, but we’re going to do the best job.”
And so I think this was some of the worst business advice that I ever got from this guy was to be like the lowest price person.
I think if anything, you should be the highest price person, or you should be priced very much at that end of the spectrum rather than at the low end of the spectrum.
Just find a way to serve the customers better, make your offer more attractive, make what you’re selling more attractive, do a better job in fulfilling on what you sell or just straight up sell it better.
So, I think this was some of the worst business advice that I ever got.