Monday, August 30, 2021

Here's why you should get rid of lower-priced products?

A product’s reselling profit is generally fixed if competition arise. Pursue maximum profit without a bottom line will ruin your business, this is not the way an honest business should do. Being greedy is just as bad as cheating as your customers will not believe you if you had sold the bad products to them once.

Lower priced products don’t guarantee the quality is as good as higher priced products. Generally, when price is reduced, the product material generally replaced with lower quality alternatives to guarantee the profit of the seller. In the meanwhile, a lower priced products can leave a bigger profit margin to the sellers when they reduce the quality to a standard without a bottom line.

You can find many lower-priced products filled on the B2B e-commerce website. They just take advantage of greedy buyers' interest to push the price very low, the truth of these low-priced products are actually rubbish, they either malfunctioned within a few months or have a very short lifespan within 1 year. The repetitive replacement of the product means a higher cost. For example, if one product you purchased on USD0.5 last for half a year, you will need two on total usd1 to last a whole year, but what if the same product cost usd1 last many years, what is your choice? This is the phenomenon that many buyers are pushing the price very low to purchase those usd0.5 cost products not considering the product cost usd1 will last many years are actually cheaper. This is also the reason why actually big brand companies are not using B2B, because once they using it, they will need to combat a price war either sacrifice their quality to lower the price or actually doing a deficit business which is not a long term plan.

If big companies not using the B2B e-commerce websites, are they actually having a higher profit? Actually no. Take leeka corp as an example, they have the rule to set the maximum profit of the product 20% of the cost which is also including the tax. The corporation has well considered the market of their buyers, if their profit is high, that means their buyer’s profit is low or they actually selling at a high price. So, once their buyers sell lesser quantity products, that means the factory has lesser products to produce, so lesser annual revenue. So, it’s not a thing as you think big companies are having higher profit.

How do higher-priced products compete with lower-priced products? The answer is time. In a short time period, buyers may choose lower price products, but once they find the product is rubbish, wasting their time and causing a lot of trouble, they should think of better quality alternatives. Also, many buyers will choose higher-priced products first, they're smart, they will not take a roundabout route to choose the lower-priced product first. So when they actually choose the higher-priced products, they find the value. They find the higher-priced products are actually worth it. Take the above-mentioned example the product cost half the price are actually far more expensive as they have lesser using life than the higher-priced products. So this kind of customer will continue buying higher-priced products. In the long run, you will find the lower-priced product sellers are continuously losing customers and continuously find new customers, but the higher-priced product seller is continuously gaining new customers and old customers still continue buying from them. The advantage is the old customers have bigger businesses and new customers have smaller businesses. You will see in the long term, why the higher-priced product sellers are winning. That's why many big brands are none lower price sellers.

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