Don't use price as your main differentiator. Lessons from a personal failure.
Making your service/product cheap shouldn't be your only competitive advantage.
We all know it, but I still learned it a hard way.
When we started our first business, we thought it would be smart idea to offer recruitment services for 1% fee (when everyone else charged 15-20%)
We printed t-shirts with one percent sign, and went to a conference offering our services.
As you can guess, it turned out to be a bad strategy 😬
Great companies didn't take us seriously. And the ones that we signed turned out to be a disaster.
Try to find something else that would differentiate you from competitors:
Quality
Customer Service
UX/UI
Niche use-cases
Technology
Not the price 💲
Russ, what led you to believe that offering recruitment services at such a significantly lower fee would be a successful strategy, and what were the key challenges you faced when implementing this pricing approach?
Could you share more about the lessons you learned from this experience? Specifically, how did it shape your perspective on competitive advantages in business, and what strategies did you adopt to differentiate your future projects from competitors?
In hindsight, what do you believe are the most crucial factors for a startup's success, apart from pricing? How did you pivot or adapt your approach to these factors when working on new projects after the initial setback?
The most important thing is neither the product or the price. It's the E2E user experience that comes algo for the price to pay for your service. Five key things to work on for this proyect (and yes, I do think you can turn it around) :
Pivot to make sure you answer yes and maybe you business idea could be to charge 10% but you give x, y, z perks that no one gives.
Shout out to you commitment and hope you are successful.
Thanks for sharing your thoughts! I wish I had this reply 4 years ago when we did it :)
Thankfully I don't do agency business anymore.
Competing on price may not be a good strategy.
But competing on revenue model may be.
Nice food for thought. So what did work for this particular business?
The best moment was when we moved into RPO model where we get paid fixed amount for out-staffing our recruiters.
A classic story of Giffen goods. Did you ever consider differentiating via a different pricing model? Eg $100 flat instead of 1%, with some basic calculations to make things about even.
Yes, we tried lots of other things after that.
Flat price, half flat/half % etc.
We eventually stopped doing this business.