Bill from the UK dreams of living in Pattaya, he will take larger risks than he would normally because he is addicted to Pattaya, Bill gets a redundancy package from work and decides to set up a bar in Pattaya, Bill has no prior business experience but he has a Thai girlfriend that he assumes knows everything because she is Thai and hes had alot of practice sitting in bars.
Bill doesn’t know the true cost of running a business, but he thinks he knows how much it is to start one. Soon he’s on a learning curve and his money is lower than he expected.
Bill has worked out all the costs in his head but he hasn’t factored in many costs that will keep his business strong, going through low season, fixing unforeseen problems, theft, dodgy landlords, unexpected tax bills, floods, reinvesting in staff, paying staff right, training, marketing, protection. Bill has brought himself a job without knowing it, but he’s not set aside a fair amount to pay himself.
Bill has no successful business friends but he may think he has, the problem is that Bills friends tell him to keep his prices low (market by price) and he is assured he will get an increased volume of customers. Bill is bullied online and by all of his friends if he argues that the price should be more, the problem is that Bills competitors have subsidised pricing because they are inexperienced business owners and they are simply blaming the world economy for lack of profits, this leaves no margin for problems, promoting to keep the business strong, to grow, to renovate, Bill subsidises his drinks like his competitors which means dipping into savings, living upstairs, skipping out on advertising, not paying staff enough, not paying himself, so Bill has little staff retention, cant afford good staff or to train and the business suffers.
Bill’s friends point out that Brexit is to blame and he’s outnumbered by bullies and so-called experts about his pricing, Bill leaves his prices low, sometimes lowers them, which makes the pain worse and finally Bill taps out when his savings have gone.
There are hundreds of Bills arriving weekly to offer subsidised drinks/food in bars/restaurants. Only 10% of businesses are very successful in these areas, they know that fair pricing is key to keeping the business going long term, anyone lowering prices to attract more customers is hammering the last nails in their own coffins.
But customers/friends won’t listen because business owners are outnumbered and they will come and go. All the successful businesses are priced to last, they will thrive and be around forever. But if you are looking for cheap drinks, meals, there are tons of Bill’s around that are making it cheap by suffering financially. There is a never-ending supply of Bill’s so why would people care anyway… Please think next time you abuse business owners for fair pricing that you say you are friends with. Business owners aren’t a charity, but if they are your friends please advice them properly.
If they are experienced business owners, they will price it right, reinvest and strengthen their position. But why should the average tourist care? There is always another person opening a business and stringing it along….. but it cannot be ran as well as someone that makes money and is passionate about running a good business.
It’s a buyers market, so enjoy it.
(For this article we are assuming that the business provides value and that the business isn’t a very large one – you can market by price with a very large business at scale)