Low Cost is the Way to Go in the Credit Crunch

This is a common myth that you need to become a low-cost provider during these Credit Crunch times.

There are some companies that hold this position very well, like Weatherspoon's and SpecSavers. Both of these have the advantage of amazing purchasing power. They negotiate a fantastic discount as they buy in massive amounts. Not many other companies have this type of buying power and those who do are sensibly staying out of it. Why get in to a price war with such a dominant company?

The low-cost strategy works best for products and utilities, i.e. something that is sold for a fixed price which the customer pays at the time and that's the end of that.

The service and especially the professional service industry must be wary of adopting a low-cost strategy. Generally, those who want to pay the least demand the most. They are also notoriously bad payers.

In short, they usually cost you more than they're worth.

So what should you be doing? During tight times, your best bet is to put together attractive package deals or offer additional benefits to dealing with you (e.g. guaranteed service times etc.) or include low cost, high value items/ additional support with your service or product.