Can you think of a single instance when you should buy business? Let’s be clear about what I mean: do business at cost or, even worse, at a loss. Just to win the business!
Anyone who knows me knows that my middle name is “put-your-prices-up”, so putting prices down is a total anathema to me. Never… never… never… or is there a situation where you should or could do it?
Well, clearly the answer is ‘yes’, or I wouldn’t be writing this article. So, under what conditions should you buy business at cost or at a loss?
You might consider buying business at cost or at a loss if there was a net gain to you that might not be financial.
There might be a client name you want or need to get on your roster.
There might be a client you support or believe in, like a charity or a young start-up.
There might be an instance where you want to test a new product or service and are willing to forego profit for the proof piece you can develop.
There might an instance where you want the case study or testimonial which is priceless in your mind.
There might be a ‘sprat to catch a mackerel’ strategy where doing a low-priced piece of work gets you onto the supplier list or demonstrates your ability so that you are in line to pitch for a bigger piece of business.
You need to be aware that once you have pitched at ridiculously competitive prices, then the client will expect you to continue working at such rates. As such, you need to be crystal clear about why the pricing is so attractive and that this is a one-off. Tread carefully.
As the Bond movie title says, Never Say Never, especially in your early days. But really, is it a sustainable strategy? I don’t think so.