The Peril of Lowering Your Prices to Compete

When a photographer is desperate for bookings, an inexperienced business owner will turn to the only option they know of: lowering their prices. Before doing this, you should consider all of the other options you have before deciding to compete with others on price.

Most photographers are artists learning to be business owners, not business experts learning to be artists. The majority of us have significant shortcomings in knowing how to market ourselves. Usually, we don’t know what our potential clients want, so in our best attempt to compete with hundreds of other photographers, we decide that undercutting on price is the only way to gain traction. It makes sense. We don’t know how else to stand out. I want to take a step back, though, and view this method from outside our industry to help us understand what a client wants.

Looking Beyond Photography

I recently came across an advertisement on Facebook for a DJ looking to gain wedding clients. The title said “Cheap DJ” and went on to state how this person used to be in a band and his friend gave him the idea to use his sound system to provide an affordable DJ service to the area, because all the other companies were overpriced. He stated that he could only offer a basic service, but guaranteed that he would be the cheapest in town. It was honestly a terrible sales pitch. It provided no value other than his promise to be cheap. Would you feel comfortable with this DJ at your wedding? Not surprisingly, not a single person was interested in his service even though he promised to beat everyone else on price. The reason I bring this up is because this sounds too much like many of the photography businesses I see pop up each year. Sometimes, it can be helpful to see something absurd in an outside industry to accurately reflect on what we are doing in our own.

The lesson here is that while every consumer does care about price to some extent, it is not all they care about. Clients care about the value they are getting for a service and then use pricing to determine if the offer is worth the cost. Photographers trying to grow a business tend to offer a low-value item for an even lower price and then are surprised when no one books them. If you separate clients into different pools based on what they are looking for, no one wants no value for a small cost. Several people want some value at a low cost. There are even more who want a lot of value for a fair cost. Finally, more consumers than you think want a high value enough that they will pay a high cost to get it. So, what pool are you using to find your clients? Are you fishing in a pond that has a minimal amount of fish and lots of fisherman? This is the peril of competing only on price.

Why Lowering Price Doesn’t Usually Work

This issue isn’t unique to photography. Check out any service industry in your area. There is always going to be someone who doesn’t know how to market themselves, so they turn to reduced pricing. They see this method work for larger stores like Wal-Mart, who offers budget pricing and constant discounts that bring them a lot of success. The problem is, Wal-Mart can sell a low-profit item thousands of times. A local service business can’t. When people don’t know how to market themselves, they assume that all people care about is price and they begin to shout that they are the cheapest around.

I have a friend in a service industry who started a business a few years ago. He recently found out that a competing company was 30 percent cheaper, but also offered a lesser service. His first instinct was to lower his prices to undercut the other business and gain more clients. This, of course, left him the option of having no profit for his work or to lower his quality to cut cost. And if they would have done so, I’m sure the other company would have undercut them in return. This is the definition of being in a race to the bottom. Instead of offering a quality service for a fair price, they were tempted to provide an inferior service at a reduced cost to compete, a move that I believe would have eventually put them out of business. Thankfully he changed his mind after seeing this strategy for what it was. So how do you relate all of this to your photography business?

How to Compete in Business

One way to develop a business strategy is to decide what you will do with the three essential elements of business: customer service, quality, and pricing. However, one revelation that you need to have is that most companies cannot compete in all three areas. The majority of successful ones only choose to focus on two.

Let’s stick with Wal-Mart as an example. When you think of Wal-Mart, you think about fast lines, employees helping in each department, guarantees on broken items, and overall cheap pricing. If you want to purchase a luxury item, however, this is the wrong store for you. Wal-Mart can beat their competition by offering the best possible price combined with excellent customer service. Quality is not their priority. Apple, on the other hand, is all about quality and service, not pricing. Additionally, you can probably think of several local small businesses, especially photographers, who don’t respond to emails and take too long to deliver products. These companies probably have good quality and competitive pricing, but terrible customer service.

So, what does this mean for you? My argument is that if the theory about only competing with two of these business elements is correct and every other photographer is competing on price, then you should ditch that race altogether and find a new way to compete. This means starting over and developing a business strategy entirely around excellent quality and top-notch customer service. You don’t have to be the highest-priced photographer around. Instead, figure out how much you need to make, set your prices, and learn to compete in the other two areas of business. Hopefully, you will find that you have left the arena that everyone else is looking for clients in and are one of the few fishermen in an entirely different pond.