As my friend and I were enjoying a fine evening at his home sipping a coffee, his 10-year-old walked in. In that adorable sing-song voice of hers, she asked
Uncle, would you like to hear a funny story?
Ajay: Of course dear. We all could use more laughs in our lives.
Girl: A big supermarket had been selling cheese for $ 1000 per kg. One day its owner spotted a small grocery shop in the opposite lane with a board saying 1 kg cheese at $ 750.
Ajay: Interesting. Then?
Girl: The supermarket guy immediately reduced the price to $ 500/kg. Then the grocery shop guy reduced it to $ 250. This went on for a while. The first guy then walked up to the second guy and yelled, Are you a fool? I can afford to give any amount of discount I like. But your business is small. If you try to imitate me, you will end up in losses. Can you guess what the grocery owner replied?
Ajay: Umm.. mind your own business?
Girl: No. He said, I wont have any losses either, because I dont sell any Cheese!
Ajay: Haha! Thats a very interesting one!
Friend: Lol! Dont encourage her. Else you will have to listen to more silly stories like these.
Ajay: What do you mean silly? Its a great story on why you should avoid indulging in unnecessary competition.
Friend: Cmon!
Ajay: Think about it. We all have this tendency to slash the prices of our products/services when we see our competitor is offering something similar at a reduced price. But what we often forget is that quality doesnt come cheap. When we short sell ourselves, we actually end up losing. And not just financial losses. The customer will fail to see the value of what you are offering and will expect to get products from you in the future too at dirt cheap prices. So if you are offering something premium, have the confidence to charge it premium. Ignore the rest. Customers who look for quality will definitely come knocking.
Friend: I see your point! (Turning to daughter) Darling, read me more often from your storybook, will you?