Small businesses are feeling the pinch of a tightening economy with 42% of respondants in a recent ServiceSeeking survey revealing they are undercutting their competitors by as much as 30% to win work.
“Starting a small business can be a tough gig,” admits ServiceSeeking CEO Jeremy Levitt. “All businesses will experience leaner times when they first start out, haven’t yet built a record of positive customer reviews, and during these periods they may need to decrease profit margins to win work.
“But as in any supply and demand industry, when the leads increase, so may well the pricing, and businesses can recoup some of their previous losses.”
On the flip side, a quarter of a small business operators say they aren’t swayed by what their competition is doing and don’t even bother to compare their prices to the broader market.
“This is a sign of a confident business which has established itself in its field. They probably have a good return client base with a healthy number of positive reviews to attract new customers, so they don’t feel the need to lower pricing to be viable,” says Levitt.
And a further 24% say they are in such demand they can warrant charging above the line.
“That’s the goal of any business. To provide an outstanding service that people are willing to pay more than average for. And it’s a common part of small business that many overlook – customer satisfaction and reviews are vitally important. There are many people who are willing to pay above average for a premium customer service; in fact, I’m one of them.”