Low Prices: Don't Undercut Your Image
Pricing is a more significant decision than you might at first think.
You might think that the only factor relevant in creating prices for your services includes the bottom line: how much you need to charge to cover your expenses and earn the kind of wage you'd like to earn. But another factor is equally relevant: your image.
What you charge is important in creating an image for your clientele. You might think that if you undercut the competition, you will gain clientele. However, the truth is that if you charge too little, you could drive away potential clients, who might view your services as substandard.
Consider the example of McDonald's fast-food restaurants. An August 2014 Associated Press article by Candice Choi notes that McDonald's is having a hard time changing its image of being cheap and unhealthy. Even though McDonald's has revised its menu to add healthy choices, including wraps, salads, and fruit, consumers still "don't consider McDonald's a place to get high-quality food, in part because the prices are so low," said Choi. McDonald's has tried to add higher-quality items, such as premium Angus burgers, but consumers were not willing to pay the price, which was perceived as too high for a place like McDonald's. The restaurant is trying to improve its image among reporters and bloggers by hosting dinners featuring McDonald's food items prepared by famous chefs. Whether this tactic will work or not remains to be seen.
Lawyers, too, should understand that their pricing will determine, to a large extent, their clientele, and they should think carefully about what kind of clientele they would like to attract.
If you start out your business as a place to get cheap services, the impression among potential clients might be that the quality of those services is cheap, too. In other words, undervaluing your services will undervalue your image.
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