Is there such a thing as a "too low price" ?

[forešković]

Is there a way to identify (other than Sale margin) if you're service price is "too low" and can it be a problem for the possible customer?

[MKarpushko]

Theres no benifit to being the second cheapest option, but there is a lot of benifit to being as expensive as you can fairly charge for the value your providing since a lot of percieved value is signalled by price.

In terms of it causing problems for the customer, it depends what your selling, but people will have lower commitment to something when its cheaper. If you spend $150 a month on a gym membership your a lot more likely to go regularly than if you spend $30 a month.

[DAA]

Its a combination of time and what your market value is. Each person and their business is different as such, we all have competition in our chosen industries/professions. Depending on how your business is doing and if you are making money will help guide what you need to do. Offering discounts and promotions is always a good thing to do but being the lowest price in town does not always bring in the quality of clients. But having low prices can bring in many clients. So it also depends on the size your your business. We all do what we need to do sometimes but there is a simple way to figure it out. Could you bring on another client and still have time to live your life and work the business the normal hours?  if your business is doing well and you can't take on more clients. Raise your prices. if you raise your prices and half of them leave. You will still make the same amount but have more time. Bring on more clients, and boom, you just expanded the business and made more money and have more time.

[TBerard]

HI,

Some customers will disqualify a product or service because the price is lower than what they expected—perhaps even lower than what a bargain might be. They have budgeted or are willing to pay more and would be concerned the low cost reflects lower quality or service.

[Josh · Accepted solution]

Hi @forešković,

Yes, something that is priced too low may be perceived as cheap or too good to be true. 

From my experience, your best solutions are doing comprehensive market research and if possible surveying your customer base.  If you can find a way for your current customers to provide feedback on their perspective of price vs value and price vs expectations you'll get a good sense of where you should be fairly yet competitively priced

Josh.