After 30+ years in business, my companies have developed a reputation for having low prices. We may not be the rock-bottom lowest-priced vendor, but the price that we charge our customers for the value we provide them is always unmatched by our competitors. Here’s why we deliberately keep our prices low and avoid price increases unless absolutely necessary:
My business startup in 1986 was terrible, and I will never forget the pain that we endured. My partner and I started a business in the basement of a wet and cold factory. We had no heat, no air conditioning, and we used blankets as our office walls. Instead of customers, our office visitors were rats, birds, flies, and snakes.
The first four years of our startup were by far the worst. We worked ~12 hours a day, nearly 7 days a week. My wife supported us on her teacher income of $18,000 a year. We lived on hot dogs and macaroni & cheese for years. Our entertainment budget was exactly $6.00 per week, which allowed us to buy 2 enchiladas and leave a $1 tip at our favorite neighborhood Mexican restaurant.
I regularly share this and similar stories with all of my employees. I’ve gone out of my way to make sure that every one of my employees understands how tough it is to start and run a small business. Even though they’ll never fully understand, I try to give my employees a small taste of the trials and tribulations that small business owners face every single day. Since I know deep within my soul that small business owners do not have any extra time or money to waste, I want my employees and my companies to always be considerate of our small business customers.
This means that our products have to be superior. Our quality has to be top-notch. Our support has to be stellar. And at the same time, our prices must remain as low as humanly possible.
This philosophy is especially difficult to balance in the cyber age in which we live. The complexity and costs associated with developing cloud-based software have increased exponentially in recent years.
Here’s one small example of why software development costs have skyrocketed: High-quality Software-as-a-Service (SaaS) software providers like Patriot Software build their software so they can push out new changes daily or even multiple times a day. Software that’s live on the Internet must be designed to run on any type of phone, tablet, or desktop computer with every type of browser. Online software also has to be made as bulletproof as possible to protect against cyber threats. To achieve the highest level of quality and security possible, Patriot Software’s Development Team has already written over 46,000 computer programs called “unit tests,” which ensure that our software’s security and quality are stellar. It’s this type of behind-the-scenes expense that drives up costs, but this is what ultimately saves the small business owner time and frustration. And, I could give many more examples like this.
So, unfortunately, every once in awhile, we’re forced to raise our prices so that we can continue providing the extremely high-quality products that we provide. And I can tell you that when we do raise prices, I agonize over how much it’s going to cost the smallest of small business owners. That’s because I realize that many of them are still living on hot dogs and macaroni & cheese like I did, and $5 or $6 bucks is a big deal. That’s why I hate raising prices.
Mike Kappel
