One of the biggest trade-offs that businesses all over the world have to keep in mind is the link between quality and cost. In most cases, reducing the cost of an item opens up the accessibility and thus, puts your product into more hands. However, it also means there’s a chance that the quality of the product will be reduced as well to compensate for the cost.
It’s a delicate balance that needs to be fine-tuned, but luckily, there are right and wrong ways to sacrifice quality. In this article, we’ll be going through some of the simple ways that you can balance both quality and cost of a product without swaying too far one way.
Reduce costs in places that don’t directly affect the product
The cheapest way to reduce the costs of your product is to reduce the manufacturing costs. In short, this means reducing things that don’t directly affect the state of the product. For instance, if you’re paying a lot to keep a well-staffed team of customer support, then firing one or two members or redirecting your resources can ultimately lower the cost of your product without directly affecting it. You might have some trouble with customer support if you’re laying off too many staff members, but the idea is that the profit you make from selling your product goes towards things like customer service. With this in mind, if you lower the price, then it means there’s a smaller share for the parts of your business that aren’t as crucial.
Focus your business model on offering cheaper products
One of the biggest problems that most businesses face is a lack of identity. When you look at companies such as IKEA and you ask yourself why they’re so cheap, it’s because the materials, process and overall marketing are cheaper in comparison. This means that those businesses such as Wal-Mart, IKEA and so on which advertise as being cheaper options, are designed from the ground up to be value-oriented and they use it as their niche to gain a wider audience. Check out this article to read up on the ugly truth about cost leadership strategy and how it can all go wrong in just a matter of weeks. However, if you’re dedicated to bringing your products to a wider audience, then there are many lessons you can learn from other budget businesses and it’s a good excuse to gradually lower the quality of your product.
While striking the right balance between quality and cost is difficult, it can be made easier with some clever planning and by emphasizing the purpose of your business. As mentioned before, if you plan to sell at low prices in order to warrant sacrificing quality, then you’d better advertise your business as such so you don’t get too much backlash. However, if you want to keep the quality of your product and still lower the retail price, then it will take a lot of planning.