It’s no secret that pricing is an ongoing conversation in the wedding industry. In the almost-9 years that I’ve been in the industry, this has never ceased to be a topic of debate, and I suspect it always will be. Recently, someone asked me why we should care. Businesses that charge far below the industry standard for their services will always exist, and the couples that are attracted to them are in no way my target market, nor the target market for most professionals.
So why should we care?
Imagine this scenario: Your closest competitor decides that they aren’t getting enough business, so they drop their prices by 20%. They justify this to themselves by blaming the economy, the evolving market, or even the “weekend warriors” who are charging next to nothing for the same services.
You and your fellow competitors scoff and roll your eyes, because you know better: business is expensive, and your services are valuable and gosh darn it, you’re going to charge what you’re worth!
A month or so goes by, and you start getting an uneasy feeling. According to social media, the competitor who lowered her prices is now steadily booking clients. On the flip side, you and your fellow competitors have noticed a distinct decrease in your inquiries. You chat with each other and decide to wait and see – after all, you are a professional, well educated on best practices in your industry, and you know your worth.
Another month goes by, and the first inklings of panic are setting in. Your inbox is so quiet that you call your service provider to make sure there isn’t a technical issue. You decide to do a competitive scan and visit the websites of your closest competitors to check out their starting prices. Your jaw drops – nearly everyone has lowered their prices by 10-20%.
You check your bank account balance and decide you have no choice but to follow suit. In fact, you realize that you need to make some money NOW or you aren’t going to be able to pay your bills soon. You decide to lower your prices by 20% immediately but reassure yourself that it’s temporary – just a few bookings and you’ll raise them again IF the market improves, since it must surely be to blame for this horrible state of affairs.
THIS is the race to the bottom.
In the above scenario, the result is troubling: couples are paying less for a service that is worth far more. Your profit margin has now decreased substantially, and you’re working just to break even, which then means that at some point you’re going to have to start taking on MORE work just to get to the same profit level as where you were previously.
Imagine if Porsche decided to reduce the cost of their top-of-the-line model by 20% because they were experiencing cash-flow problems, and their competitors were priced lower. They keep the price low for a year, and then decide that the economy has improved and start raising the price again. But there’s a problem: consumers, savvy as they are these days, now know that they can get that type of car for the lower price, so they expect – or even demand – the lower price point. So when Porsche raises their prices a year later to what they believe is the ACTUAL value-based price, their customers balk and refuse to buy – deciding instead to wait until the prices go down again or to purchase from a competitor. Porsche experiences a near-halt in sales, and has no choice but to lower the price again. THIS is why it is so incredibly difficult to lower your prices and then raise them again. (Now, we all know Porsche would never use this tactic because they know better, but it makes for an easy example.)
In this time of social sharing, competition is fierce and often public. Couples can share their experiences with a mouse-click. We’ve known for years that referrals and positive reviews are extraordinarily powerful in our industry. What this translates to is this: If your competitors (specifically, competitors who market to the same audience as you) lower their price, it will become expected by your audience, because referrals and customer experiences are so easily shared.
It sets an expectation, and it’s not a good one.
Now, to clarify a few things: YES, pricing should not be the deciding factor (in an ideal world) when choosing a wedding professional. We all know that (though I feel many in our industry are still unclear on how to overcome it), but the reality is, you still have to offer competitive pricing UNLESS you’re offering something extraordinary AND are skilled at communicating that through your marketing. In my experience, this is something that the majority of wedding professionals still struggle with.
What this means is that you are likely at risk of being a reluctant participant in the race to the bottom. I can see that you’re shaking your head and saying no, no, that will never be me, I’ll never lower my prices. I hope you’re right – I truly do – but I’m seeing this happen more and more, and to some of the most highly regarded wedding professionals that I know. They feel, simply put, that they have no choice.
Let’s not be naive and assume that the basic principals of economics don’t apply to our industry: a low-cost/high-volume competitor can absolutely drive down the pricing for an entire industry. How many boutique book stores do you know of these days? I’m guessing very few. Why? Because Barnes and Noble. Chapters. Indigo. Lower pricing, higher volume, and voila – the small business owner loses. We tell ourselves that this won’t happen in our industry – instead, the lower priced competitor will realize that their business model isn’t sustainable, and either raise their prices or leave the industry. While this may still be the case in some instances, I’m observing a shift towards a new business model where these competitors are instead diversifying their businesses so that they can keep their pricing extremely low and stay in business.
So what’s the solution?
The fact is, there is no one solution. This will likely be an ongoing conversation for decades to come. We have to be willing and able to evolve in our own businesses, and adapt to the quickly changing market. We’re moving into a period where Millennials make up the bulk of our client base. Millennials are savvy shoppers, and they make purchasing decisions differently from their predecessors. Providing value isn’t enough – we need to provide value and share values. They are experiential, with high expectations. In essence, we have to be committed to always doing better than we did yesterday.
And this means committing to professional development, being involved in the industry, and taking on the responsibility of helping to teach, train, and mentor newcomers in our industry. This is a responsibility I feel that we all share. Reach out to that photographer who is offering wedding photography for $500 and take them out for coffee. Invite them to join the Wedprenuer Community or any similarly focused group or association. Do something!
Maya Angelou said it best:
“I did then what I knew how to do. Now that I know better, I do better.”
It does no-one any good to sit around and complain or shame businesses or people who are charging next to nothing for wedding services. If we’re going to succeed, we have to be leaders and help guide them. Our industry depends on it.
And that, my friends, is why we should care.
So here’s my challenge. The next time you see someone on Facebook or elsewhere offering the same services you offer for a fraction of the price, contact them and invite them out for coffee. Help them, don’t judge them. Together, we can stop the race to the bottom, and if we can do that, we’ll all reap the benefits.