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How To Compete -- And Win -- When Rivals Cut Prices


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#41 Rolling Thunder Games

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Posted 21 May 2014 - 08:06 PM

spacewalktrc, Could you fill out your profile info so we know where you are located. Not getting into whatever this SW thing is that you guys are talking about; Just like to know where people are from that are on the MWF. Thanks.


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#42 My Bounce House Guy LLC

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Posted 22 May 2014 - 04:32 AM

Sure thing Rolling Thunder Games.



#43 MWI

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Posted 26 May 2014 - 09:58 PM

I wasn't pidgonholing every Space Walk branch intially, but after reading all of your posts, maybe I should.  It is very cold and miserable in Iowa during the winter months, so maybe I should move down to Port St. Lucie this winter and show you what real competition is?  I'll be at a disadvantage because I don't do a bounce for less than $200!  I alread own (and have for many years) floridainflatablerentals.com, so I'm ready to go.  You claim to have 40 inflatables and maybe you do, but that might only be a $40,000 investment in equipment.  I have 46 inflatables, which is bigger than most, but I'm not one of the big dawgs!  However, my units probably average about $4,000 each.  I have BIG stuff, but I only have 6 bounces so you might win the $99 bounce house game, however if you lowered your price to $79 maybe you could expand quickly to 100 units. I also find it interesting that Space Walk is fairly big, but it seems like you are representing the whole company and other branches aren't chimming in.  I find that interesting.



#44 PTBounce

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Posted 27 May 2014 - 11:41 AM

They come and go.  We had a guy from Dothan AL swore all the same things at one time.  Still can't understand that, with such a good business model and support, they come around here asking for advice



#45 the inflatable fun co.

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Posted 27 May 2014 - 04:25 PM

@MWI I'm not sure how you would be showing me what real competition is when no one would want to use you because of your high ticket items. I'm in a residential market and those high ticket pieces aren't very active in this area and if its just a standard bouncer, it won't rent out for 200 (unless maybe no one else has a "frozen" themed bounce house except you, and there might be a few people willing to pay double the standard price for a bouncer, just to get that theme.)

 

I mean this with all due respect, I don't understand how you can say something like that when you don't even know my market area. I know nothing about yours either. You've done very well in yours and I'm doing well in mine. We have totally different seasons, customers, set prices etc. Why try to artificially compete with our words? It doesn't make any sense to me.

 

Space walk is fairly big but I'm not sure how many of them are actually on this forum. And I don't know why they would chime in to agree with me unless they had a market and strategy identical to mine to where they could relate.

 

Oh and with 46 units you would be the biggest company in the area by far!! So here on the treasure coast you definitely would be a big dog whether they were small or large inflatables. On another note, I'm not trying to compare myself with anyone (on this forum). I compare myself to my competitors because we are all servicing the same people, but as far as this forum I know that all of our situations are unique (being apart of space walk and rubbing shoulders with so many other branch owners in different markets has quickly shown me that). Much less could I compare myself with someone that actually owned their own inflatables. I'm just a subcontractor.

 

Spacewalk, Would you mind sharing what the breakdown is between delivered units and customer pick ups? At 40 units I can see the math working out for you. 



#46 MWI

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Posted 28 May 2014 - 09:45 PM

Your last couple posts sounded much more educated and in line with this industry!  I'm not a hater, but I feel I need to represent our best interests nationwide for all of us to make a living, and even Wal-Mart isn't performing so good currently offering the lowest price approach.  I won't go to Wal-Mart because it takes me 15 minutes to check out for one item.  I would rather pay $1 more per item or more and be in and out of the store quickly!  Honestly, if you are just a bounce house business are your guys really doing 7-8 bounce set-ups in 4-5 hours with it set-up safely?  I'm OCD, and I think I'm fast, but residential set-ups always seem to take longer than anticipated.  You are waiting for the person to get home, a signature, a check, etc., so if you have each one-person crew doing 7-8 set-ups and tear-downs each day I think that is exceptional!  Here is a piece of advice to listen too:  If the rates in your market are really low and inventory is tight, then let the low-ballers sell-out quickly and then charge full price or more because you are the only company with availability.  Almost every company in our market started in business the same time with the same amount of units, and some of us are considered leaders in this business, and others are considered just back-yard businesses.  We are in a tough industry, so we all need to represent it well, or there won't be an industry to represent.


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#47 funlight

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Posted 29 May 2014 - 09:29 AM

I have no problem with the SW system, if you are SW.  For ‘Branch Managers’ with minimal access to capital, use of a reliable truck, no (additional) cost storage, and a willingness to hustle I can see it is a good way to see if they can make a go at this business.

 

My first question is, when you hit 40+ units going out the door regularly, with trucks, equipment, reliable staff, understanding of marketing vinyl, deep client list, and such – when do you ditch SW and strike out on your own?

 

My second question, how much gross profit would you need to lose to equal the same net profit if you raise your prices 5%, 10%, 20%?  The trick to succeeding (different from surviving) is achieving high profit levels.  A high volume approach is great but I question its sustainability in this business.  You can never drive out all competition such that you can raise your prices.



#48 CapitolOnlineAuctions

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Posted 29 May 2014 - 09:51 AM

FunLight,  

I would think SW has a non compete clause in the contract.



#49 bounce2this

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Posted 30 May 2014 - 02:06 PM

Changing the subject but staying close to the topic...

What if I don't have what a customer is looking for but something similar to it, any suggestions? I'm great at customer service but my salesman skills are weak. Basically a customer wanted a combo with external slide, mine is a NJ 4n1. Offer add ons to sweeten deal? Lower price to keep the sale (sounds desperate to me)?

I might have just answered my own question but suggestions are greatly appreciated.

#50 bounce2this

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Posted 30 May 2014 - 05:27 PM

Agreed that a verbal description, or seeing it live and in use, does it better jusyice than pictures. I've stressed the safety aspect before but for some reason haven't lately. Some people love that it's enclosed and some don't. I don't think I've had any overcrowding issues but I don't think I stick around long enough to see.

#51 My Bounce House Guy LLC

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Posted 30 May 2014 - 05:38 PM

when they have to get off the slide, get off the unit, and then have to climb back in the bouncer, it manages the flow of traffic since it results in people off the bouncer, Also when it does get overcrowded sometimes it will result in a line at the front entrance for them waiting to get in.



#52 MWI

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Posted 31 May 2014 - 11:05 PM

A couple of the last posts caught my attention.  I don't want to be the leader at everything!!!  I want to have the best reputation, most satisfied and loyal clients, and most profit.  I can lose at everything else.  But to have the best reputation and most profit probably means I'm winning in a lot of categories, but lowest price and volume probably aren't them.  As for the combo posts, personally I'm not a fan of combos.  I only own one which is the UFO Combo from Cutting Edge (N-Flatables) and it is awesome, but I won't set it up for less than $325 plus tax, normally I'm at $400 plus tax unstaffed.  It takes a long time to set-up and tear-down, plus it doesn't fit well through a standard gate easily.  I would rather offer the client the 18 ft. Mini Deluxe Slide and a Wacky Themed Bounce for $400 plus tax.  I can't justify "Combos" in my inventory financially, but the UFO Combo looks really impressive and helps separate me from the competetion.  When I do "Huge" events I bring HEC Worldwide, Cutting Edge Creations (N-Flatables), and Inflatable 2000 units, and the combination from those manufacturer's produces awesome results!!!  I don't think I would be as successful only from purchasing from one manufacturer.  We all define success differently, but if I had to do it all over again I don't know if I'd make any changes.  For NEWBIES, I have had "small issues" with all the manufacturers mentioned, but they have been all very small and taken care of fairly and quickly!!!  Everyone is trying to bring the highest quality product to the market at the lowest possible price, and that second part means sometimes the first part fails.  Personally I've become very successful with using HEC Worldwide, Ninja Jump, Cutting Edge Creations (N-Flatables), and Inflatable 2000 products, but I'm very experienced and know what to buy and not to buy.  I don't regret any of my purchases.      


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#53 Mr. Inflatables

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Posted 01 June 2014 - 11:58 AM

 

 

How To Compete -- And Win -- When Rivals Cut Prices

This is not trivial.. and very simple and sweat answer. Find a way to separate yourself form the pack and be the best at it.  This is a trait that has served me well since I was young in the work force rising up the ranks of management for promotion and as a business owner. No matter at your job or your business competition. Figure out where the others your competing against fall short and exploit that as your strength. Guys and Gals... sometimes it's the small simple stuff that gets the ball rolling.

 

In my late teens early twenty's about I started work at Macy's as a men's dept sales associate. The night before I showed to my first day on the Job I got into a knock out drag out fist fight at a party. I showed up to work the next day looking like the elephant man with a very swollen black and blue face. Needless to say I was written off by all management including the Store manager who was devising my exit plan that very same day. But I didn't give her plan a chance.  In my first week I found a weakness in my peers around me.  The largest weakness was folding shirts and merchandising tables. I set out to be the best at folding shirts... long story short with in my 3rd month of employment I was the dresswear means team leader. Being the best at folding shirts got me recognition and the attention of the folks that mattered. They started to notice all the other things I did exceptionally. Which gave them the confidence to give me more responsibility.  After 4 more months +/- I was the new Assistant Men's manager on a fast track program. They started shipping me around all the socal men's stores training folks how to fold shirt and merchandise.  Anytime one of the local stores with in driving distance to me was receiving a visit from corporate.. they sent me to get the store ready. Sorry trying to condense the story as much as possible... It wasn't much more then 4-6 months later I was the Men's Department manager. 

 

My point being... plan an achievable goal to set yourself apart from the folks around you. Be the best at it and in time your customer base or employer will notice the other things you do well. Possible even gain enough confidence they will challenge you into new things. ... this is my advise how to compete and be your best. Enabling you to win even when the competitions fierce around you. 


Edited by Mr. Inflatables, 01 June 2014 - 11:59 AM.


#54 Amanzi

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Posted 30 June 2014 - 07:53 AM

“If you’re making $50,000 or less in your business, it’s not a business, it’s a job, and it’s not a good job either.”

 

read full article here

 

 

 

written by  Kathy Caprino

 

I speak with people every day who offer great products, services, and programs that are a cut above, but they are failing to make any money.  There are numerous critical factors behind a failure to generate sufficient revenue, but it’s usually not what we think.  Often, our subconscious blocks and mindsets are holding us back.

For example, I see service providers by the hundreds who stay stuck in a cycle of undercharging for their work.  They won’t budge out this trap, no matter how many people tell them that they’re not charging enough (even their own paying clients).

I remember hearing Nell Merlino, Founder of Count Me In For Women’s Economic Independence and the Make Mine a Million $ Business Program (through which I was honored to win, with several others, the “Micro to Millions” 2008 award in CT), speak at a More Magazine Reinvention Convention in NYC, and she rocked me with this message:

 “If you’re making $50,000 or less in your business, it’s not a business, it’s a job, and it’s not a good job either.”

 

I was making around that at the time, and I was truly offended and angered at those words.  But I’ve come to see the validity in that message (and I realize that I was in denial about money at the time).  If you were working for someone else, and had to toil for 18 hours a day to make ends meet and still generated less than $50,000, you’d say something would have to change, right?

Below are the top four excuses I hear people give for not charging what they deserve.  I used all of these excuses myself, before I figured this out:

1.  “I’m having so much trouble having people hire me as is.  It would never work at a higher price/rate.”

2.  “I’m not really sure what my work is worth, and what it could command.”

3.  “I’m scared to do it – where will I find customers who can pay that?”

4.  “Times are bad – I don’t want to contribute to people’s challenges by making it hard for them to pay me.”

 

But underneath all this, I’ve observed deeper reasons for a reluctance to charge more.  These reasons are:

A deep insecurity about the value you’re bringing

Folks who chronically undercharge also tend to work very long hours each day (18+), and don’t stop.  That drive to keep working without stop often stems from a lack of confidence that what you deliver is really good enough.  I’ve seen scores of coaches and therapists go over their one-hour session time habitually, giving more and more time for free. The reason? Deep down, they’re afraid they’re not good enough, or powerful enough to help the client in the time allotted.

 

A lack of understanding the key outcomes you deliver

Another reason why people don’t charge what they deserve is that they haven’t taken the time or effort to measure, quantify or identify clearly the key outcomes that they offer. They also don’t know how they stand apart from their competition.  What you offer IS different from your competitors, but do you know how, exactly? Do you know what you bring to the table that your top 30 competitors don’t, and can’t?  If you know your competitive advantage, are you marketing and promoting it wherever you go?

A failure to realize that prices that are too low also attract problem clients and customers

Your prices reflect your value, expertise, know-how and your status in your field. If you undercharge, what message do you think that gives prospective customers? Do you want to attract only customers who will pay bottom dollar?

Thinking you’ll get more great clients and customers this way, you’re missing a critical point – people who underpay also tend to make you crazy in the process of working with them. They nickel and dime you, second-guess you, and refuse to honor, respect or value your great experience and expertise (in part because you’re not honoring it yourself).

 

Mistaking pricing as the most important driver in their business

People who undercharge also tend to think that pricing is what brings in customers, and often neglect critical endeavors like marketing, promotion, social media engagement, publicity, events, thought leadership, networking, affiliate and referral partners, and more. In short, they don’t know how to market their work or generate more business, and rely only on word of mouth.  When you rely solely on word of mouth, then the circle of customers you have will only be those who won’t pay enough.

 

Vagueness about the numbers

You need to have a tight handle on how and where the money is coming in and going out. So many small business owners have someone else overseeing the finances, so they’re clueless about the financial drivers, the cost of doing business and what they’re truly earning. Don’t make that mistake. Take control of your finances and your key business measures and metrics, and understand the financial picture intimately so you can improve it.

 

What to do differently?

Take these six steps:

1. Identify the process of how you work and what you bring to the table, along with the special outcomes it delivers.  Do an exhaustive competitive analysis and figure how you’re different, and better, than the competition.  If you find you’re not better than the competition, take some steps to power up your offerings and become stronger and more effective in what you do.

2.  Stop relying on word of mouth as the only way to generate business. Start marketing and promoting your business in ways that will exponentially expand your circle of influence. (Yes, you can do this, and it doesn’t have to break the bank.)

3.  Overcome your own personal blocks to attracting and earning great money.  Check out these powerful books –  Tapping Into WealthThe Big Leap, and The Energy of Money  - to revise your relationship with money and become more excited about earning what you deserve, and speaking up for that.

4.  Develop stronger boundaries. Start saying “no” to outlandish requests for your time and effort.  Know what your time is worth, and demand respect for that.

5.   Get some help to build and strengthen your business.  Find a way to get some financial, accounting, and marketing help.  Take a Quickbooks class to learn how to manage your financial picture. Also identify how you can delegate more (to an intern, a virtual assistant, etc.), and focus more time on what you do fantastically. Leave the rest of the work to those who can support you well doing work they’re great at.

6.  Charge 20% more starting today. Just do it.  Then figure out what the right number is within the next few months, and start charging it. You can transition your existing clients to your higher fees in a more gradual way, but new customers and clients need to pay you more, starting now.

In the end, if you’re not charging enough, there’s something holding you back from believing in what you deliver, and asking for what you deserve. Usually, these blocks emerge from messages we learned in our childhoods, about our own self-worth and power, and about money, wealth, prosperity, and the energy of money.

Take a step today towards overcoming these blocks.  Your business will grow when you do, and you’ll finally be able to love your work rather than drown in it.


Edited by Amanzi, 30 June 2014 - 12:36 PM.

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#55 natej

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Posted 30 June 2014 - 09:39 AM

I agree Willem.  It's unfortunate that there are so many operators who just don't get it.  I hope everyone in Arizona reads this.  We have guys who set their prices about $10-20 less than us all day long, while we continue to raise prices and sell out continuously.  Oh well, I let them work harder for less money.

 

I couldn't imagine making less than $50k a year doing this business.  Heck, $50k a month!


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#56 PTBounce

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Posted 30 June 2014 - 11:31 AM

 

FunLight,  
I would think SW has a non compete clause in the contract.

 
They do not have a non-compete clause. Our previous local branch operator/quitter ran his own side business while using SW merchandise, SIMULTAEOUSLY. He was SW and Emeradl Caost Inflatables

#57 PTBounce

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Posted 30 June 2014 - 11:55 AM

Spacewalktrc: I feel your pain. We have more in common than you realize.



Everybody wants to be the King. Yet they're unaware of what to do about it. They all know who the King is in my area and they can't take that next step.



It's rough but satisfying. Having to wake up and see the owner of the best inventory and customer service is a humbling experience.



Pardon me while I go look in the mirror again. It's been a little while

Edited by PTBounce, 30 June 2014 - 11:59 AM.


#58 FroggyFunCO

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Posted 28 July 2016 - 04:04 PM

 

Good Post!

Can you and others elaborate on examples of adding value instead of discounting. Ecspecially when your in an area where craigslist is so popular and seems to be a mainstream of free advertising for inflatables.

In the Dallas area craigslisters are renting bouncers for an average $75 and as low as $60. I do not advertise on craigslist frequently, but when I am slow or low on rentals I do. I only post the unique inflatables that I have and the cragslisters dont.

In regards to the Craigslisters, flag the dog$hit out of them. Flag from work. Flag from home. Flag from your IPhone. Flag from your IPod. Have friends and family from out of State, flag. The more flags the better

 

Just curious what flagging does...



#59 FroggyFunCO

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Posted 28 July 2016 - 04:10 PM

I like all of this info!  There is a new competitor in our town offering all day commercial rentals for $70 - $80,  including set up and free delivery to anywhere.

I am baffled at how they can afford to do this.  I put a pic of their stuff below----they look like nice inflatables, so I'm confused!

13567049_1740708179545648_26461484375755



#60 FroggyFunCO

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Posted 28 July 2016 - 04:16 PM

This is worth a read: http://www.entrepren...article/222519# by BRAD SUGARS

If there’s one piece of advice I’d offer to any entrepreneur starting out, it’s this: Never
discount—no matter how much you may be tempted to— always look instead to add value.
Many seasoned entrepreneurs discount as a way of doing business, without ever really looking at their numbers or the real costs of cutting their prices. They’ll point to “discount” success stories like Wal-Mart or complain that the competitive landscape forces them to cut prices. While Wal-Mart, one of the great retail success stories of all time, has built its brand on low prices, most business owners don’t see the very real distinction between “low price” and “discount.”
Related: Death by Coupon

First off, a company like Wal-Mart knows every margin to the “nth” degree and can deliver low prices because it has created scalability based on the huge volume of products it sells. But very few companies have such pricing power. Unless you do, there are better ways to play the retail game than looking to compete against Wal-Mart.
If you don’t really know your margins or have any scalability on the cost side, straight discounts are a ticket to disaster, not only in terms of finances but also in people costs. In a discount environment, you are essentially setting your team up to work more for less money.

Here’s how …

Let’s say you’re selling a widget for $10 a unit, and your net cost is $7. Your net profit on each widget sold would be $3. If you sold 10 widgets at full price, your net profit would be $30.
Now let’s say you decide to have a sale with a 10% discount offer. After selling 10 widgets at $9, you have revenue of $90. The net cost for widgets remains constant at $70, but your net profit has decreased to $20.
That doesn’t seem too bad. Until we realize we need to sell 50% more widgets just to keep our profit dollars even, at $30.
Take a look: 15 units X $9 = $135
$135 - $105 = $30 profit
The numbers look worse the more we discount. At a 15% discount, we’d have to sell 100% moreunits (a total of 20 widgets) to keep our profits at $30:
Example:
20 units X $8.50 = $170
$170 - $140 = $30 profit
Would you really want to run a company where the pressure is on day-to-day to sell 100% more units just to stay even?
Now you can start to see why failure rates of businesses that continually discount are so high and why the burnout rates of their owners are equally bad.
Playing the discount game means you’re literally going into your company everyday to price yourself right out of business.

Related: Groupon, Other Deal Sites Not a Good Deal for Small Businesses

So what’s the solution?

1. Know your numbers and margins and protect your margins at all “cost.”
This simply means you need to know your cost basis at every level of your company andlook to lower it where you can. Then, at least, if you decide to offer a price incentive, you’re not cutting your own throat to do it.


2. Add to your value proposition at every opportunity.
While you shouldn’t discount, you should always look to add value, both real and perceived. That could mean bundling options or packages, or it could mean a better customer service experience. People are more willing to pay for good service these days than ever before.

3. Develop a growth rather than discount mindset.
The reality for any business is that you won’t ever be able to cut your way to success. You can cut costs only so far before some aspect of the business suffers. Growth is really your only option. So start to think of ways you can leverage your current resources in new or innovative ways. Reposition products or services, for example, with a private label at a higher price point.

Whatever you do, think twice about the ramifications of running a 10% off sale, unless you got a really great deal on your inventory. Just remember that “small” 10% discount means someone in your organization has to work 50% harder to earn the company the same dollars. At least in the beginning, that person will most likely be you.
Don’t fall into the trap of thinking if you don’t give discounts, you’ll lose sales. Look to add value and deliver an incredible experience for your customers. You’ll discover new ways to increase profits, while others find themselves caught in the discount trap -- and soon out of business.

 

We just ran a promotion for $10 off a weekday rental.  I'm wondering if others have a weekday price and a weekend price?  I hope this isn't an example of what you are saying not to do.  (new to this business and wish I'd found this forum in the very beginning)






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