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A guest post by Kalen Smith of MoneyFile.net.

Most businesses understand the importance of consistent branding. Sometimes, a branding method doesn’t work and needs to be abandoned. Most branding strategies will be effective if used long-term. But the way you price your products affects your brand a lot more than you would expect.

One of the concerns about doing business in a recession is that businesses feel they must change their marketing strategy to survive. They decide to compete on low prices rather than quality. These efforts rarely work long-term. Worse, after the recession is over, they may have permanently damaged their reputation.

Businesses that lower their prices and change their marketing campaign create some problems for themselves, such as:



  • Lower profit margins. Lowering your price point will make it more difficult to meet your expenses. As competing companies engage in pricing wars, they may quickly find themselves unable to create a sustainable cash flow. Ultimately, they face stagnancy or bankruptcy.


  • Reputation for poor quality. Your success depends on your reputation. When you lower your prices, you give customers the perception that you offer an inferior product at a lower price. Psychologically, customers find a link between quality and price. Customers will likely be confused what your new business model is and what you intend to offer them.


  • Long-term brand changes. Changing your marketing practices in the middle of a recession can permanently change the way your customers view your company. Most businesses think they can drastically lower their prices during a recession and raise them again after the economy recovers. After the recession ends, customers will have permanently changed their perception of your products. Once they are used to paying $10 for a product, they will have a hard time thinking it is worth $30 again. You can’t just expect your customers will go back to paying the same price you charged them before the recession.


Lowering your prices in the face of a recession may seem like a good idea. However, it can be a dangerous practice to engage in. You are better off providing high-quality products and services. Throughout the economic downturn in 2008, customers consistently said they were still willing to pay fair prices for high quality products.

There is nothing inherently wrong with building a branding strategy that involves providing economical products for lower prices. The problem is that many companies try to change their pricing strategies in response to changes in the economy. This can undermine their branding strategies and hurt their profit margin.

If you have worked hard to build a reputation for quality, your best bet is to stick with that. Keep your prices exactly the same. Your customers will know what to expect and will continue to respect you for the quality of your services.

Don’t worry about what your competitors are charging. They may face insolvency in the next few months as they struggle to create enough revenue to meet their expenses.

Kalen Smith is a personal finance blogger for MoneyFile.net, a personal finance website in the saving and financial advice sector.

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