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“too hungry to eat.”

Discussion in 'Financing Your Business' started by T J Tutor, Jun 2, 2016.

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  1. T J Tutor

    T J Tutor Member

    I was reading a great article at Business Insider today about Silicon Valley investor Marc Andreessen. They spoke of a recent interview with Tim Ferriss (author - The Four Hour WorkWeek). Ferris asked Andreessen what words would he put on a billboard. Andreessen answered, "Raise Your Prices".

    The reason behind it is evidently Silicon Valley start-ups have been in price wars to the extent the mentality has been to sell anything and everything as cheaply as possible to gain the greatest number of sales and/or shares. This led to the coining of the phrase, "too hungry to eat". He went on to explain, “They don’t charge enough for their product to be able to afford the sales and marketing required to actually get anybody to buy it. And so they can’t afford to hire the sales rep to go sell the product.”.

    It just goes to show you, going on the cheap has consequences, something I have long professed in my businesses since the eighties. It has long been my opinion to cater to the people with the money, and make sure you provide them the best bleeding edge products and services at the highest prices they can bear. Eventually the market catches up, but it is during the period the market is catching up with you and the volume in sales increases where the companies providing the bleeding edge products and/or services earn their monies to advance faster than the competitors can. "It's the first kitten out of the box that gets the pick of the tits" as my grandmother used to say.

    Have any of you ever structured and adjusted your company posture in this fashion. I agree with Andreessen with this, keep the prices as high as possible for as long as possible before the milling heard of competition catches up with you. By that time, you are off leading them all on another chase anyways.
    Carter likes this.
  2. VirtualGlobalPhone

    VirtualGlobalPhone Moderator Member

    Very nice article @T J Tutor ,

    Price (Margin) is like makeup you want to put on the sexiest female in the room. If you put either more or less people does not want to look, if you put perfect then she appears ordinary just like other :).

    Very challenging....

    We go through this every day.
    T J Tutor likes this.
  3. azgold

    azgold Moderator Member

    You should always charge what the market will bear. I've heard that saying for decades.

    I've worked in the promotional products industry since 1987. About 20 years ago, one trophy and plaque supplier had declining sales. So, the reps started selling materials out of the trunks of their cars. And yes, they went belly up in a very short period of time, despite selling their wares.

    I couldn't help but think of that after reading your post, TJ. It has happened time and again to businesses throughout history, yet it still gets repeated. I think people go into panic mode, or something.
    VirtualGlobalPhone likes this.
  4. Hassan

    Hassan Member

    Very nice!
    I would like to share my experience. I went for my very first job interview for Assistant Marketing Manager. All went well. During the job interview they offered me the post of a Marketing Manager. I was over the moon.When they asked me regarding the salary, i told them its my first job so anything would be ok by me. Thats where i sold myself cheap and got the salary package of Assistant Marketing Manager.
    I can relate to this article in a way.
  5. T J Tutor

    T J Tutor Member

    Yup, that was a good lesson to learn. Always know what the market is willing to pay for the best and negotiate that for your self as best you can.
  6. azgold

    azgold Moderator Member

    That's too bad, Hassan. Sounds like they took advantage of you. Good lesson though - next time, market yourself and your abilities. :)
  7. Hassan

    Hassan Member

    It was my first job and the lesson learned for life.
    azgold likes this.
  8. moneytalks

    moneytalks Member

    Depends on the client and your profession, I suppose. Sometimes I do web development work for some folks out of the goodness of my heart in exchange for referral business. Other people I get what the going rate is because they are doing well and can afford my services. I've seen great returns on both ends.

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