Are You Good, Fast, or Cheap?

There’s an old saying …

You can be good, fast, or cheap. Pick any two.

So you can be good and fast. You can be good and cheap. Or you can be fast and cheap.

So why can’t you be all three?

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Because you can’t deliver all three. More specifically, you can’t defend all three. It costs money to be good; it costs money to be fast.

If you’re trying to compete on all three, a competitor can come along who only competes on two. Let’s say they’re good and cheap. Their cheap is cheaper than your cheap because they’re not trying to be fast. So now you’re only competitive on two of the factors – good and fast.

“Good, fast, and cheap” is really just a way of discussing the three components of value:

• Quality
• Service
• Price

6 strategies to beat your competition

Defensive strategies 

#1 – Improve quality, keep price constant
If quality increases but price doesn’t, you increase the value your customers receive. You focus on trying to make your “good” better so you gain business.

#2 – Improve service, hold price constant
If you improve your level of service, while keeping your price the same, your customers will perceive it as a better deal. You focus on making “fast” even faster. This actually applies to anything having to do with customer service, not just speed. 

#3 – Decrease price, keep quality constant
If you can decrease your price without sacrificing quality, you’ll increase the value to your customers. We all love a good deal, right?

#4 – Decrease price, maintain service levels
If price falls without sacrificing service, your customers will realize they’re getting a better deal. More people will buy more!

So here’s the caveat to these four strategies – you have to make a profit to stay in business. These defensive strategies give you a competitive edge, but they all cut into your profit margin.

So what you’re trying to do with these strategies is increase profit by increasing sales enough to compensate for the lower margin. It’s risky! Because if you don’t get it right, you’ll work harder (because you’re selling more) for less money (profit).

Compounding strategies

#5 – Improve quality, increase price
If you can improve your quality, but increase your price, you’ll hold value constant. Your customers are still happy, because they’re getting the same value as before. They’re paying more now, but they’re getting a better product.

#6 – Improve service, increase price
This is the same as #5, only here you’re delivering a higher level of service.

These final two are designed to increase your sales and at least maintain your profit margin. Therefore, your profit should go up. Of course, we’re assuming that you’re able to maintain your customer base, even at the higher price. 

As you consider these strategies, think across your whole business. You may find it valuable to use different strategies for different products or services.

Our bigg quote today is by Michael LeBouf:

Create value for your business by delivering what your customers value.

Next time, we’ll answer a question from a member of our community about getting started on a project. Until then, here’s to your bigg success!

 

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(Image by egahen79)