Pricing Wars: Is It Worth the Fight?

Apparel Pricing Wars

A common aspect of the decorated apparel industry are pricing wars. You know how it goes: That “other shop” across town slashed their prices, suddenly drying up your business. What do you do?

The knee-jerk reaction, of course, is to drop your prices or offer the “Next Big Sale”. After all, we Americans like the idea of saving a buck (even if the vendor raised the price five bucks before dropping it one). That’s partly why we’ve shipped all our manufacturing overseas – we’ve been trained to want cheap, cheap, cheap and view saving a buck as almost a form of competition.

Before you bend over backwards to drop your price, though, stop and consider some things first:

First, make sure it’s a case of apples to apples. The other shop might not be offering the same stuff in the same way as you – they might be offering cheaper garments, lower-quality inks, omitting costs from the estimate such as screens, etc. Or, they might be a leg up on you and have been efficient enough to drop their operating costs – and thus offer a better deal while still making a good profit.

Whatever you do, don’t treat your hard work as a mere commodity like gasoline or coal or pig’s ears. You’ve spent years working on perfecting your methods, picking inks, learning the printing process – and you’re going to give it all away cheap?

The three solutions to this are:

1. Decide who your ideal customers are – the perfect balance between your business skills and talents. It could be summer camps, restaurants, schools – whatever. Then you can focus on what makes you unique.
2. Evaluate your business. What are you offering that no one else does? Better overall quality, a unique printing technique, better art, faster production, cost-effective delivery, efficient tracking processes? If you’re lacking in an area, make a plan on how to fill the gap.
3. Measure it all – find out what your exactly what overhead is, the time it takes to do something, plug any financial leaks in the company, and analyze your past sales. Then you’ll know where to tighten ship and focus on customers and jobs that matter – and won’t sweat it when a low-dollar customer walks out the door.

Use all the above to define a value proposition on why customers (particularly the customers you want) should choose you over the competition, and broadcast it to the world.

(One way to monitor your efficiency and increase it is to use a small business ERP system to track your orders and exactly where the money and time is coming from and where it’s going. Shopworks OnSite was designed to do just that – read more about OnSite here.)

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