April 12th, 2007 - by ses5909

“Know Thy Enemy” – The Art of War, by Sun Tzu

“If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not your enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle.”

When you run a business, it’s always a good idea to know who your competition is as this is what really keeps businesses evolving. Recently, our company was recognized as an Authorize.Net certified developer. As an aside, Authorize.Net is the most popular payment gateway which acts like your website’s credit card terminal. Back to my story… since this has happened, we’ve had a ton of phone calls asking us to integrate Authorize.Net into an already existing website. This increase in traffic and sales has been extremely welcome, but after a couple months, we realized that we were landing every single lead that came our way. And when we told them our price, people immediately said , “YES!” So, we wondered if our prices were too low.

This is the solution we provide to our average client:

  • Payment information capture page with field validation in place (to include proper credit card validation) to catch any errors before the page ever needs to communicate with Authorize.Net
  • Integrate the payment processing into their site and update their database as necessary
  • Display thank you page

For the time it takes us to do all of this, we still believe our prices are fair. But curiosity got the better of me. There are more than 20 developers and 11 of them compete directly with us. So, I wanted to know what it was that made our clients pick us over the competition. At this point it was more curiosity than anything because we had already decided our prices were fair and we weren’t changing them. So, I decided to look at the list of developers and make some phone calls.

The plan – I wanted to find out what others were charging for the same thing we charged.

The scenario – My story is that I sell homemade jewelry on ebay and I have decided I want a real website to sell it on to cut out the ebay fees. My brother is a whiz programmer and he is developing it for me, but he knows nothing about payment processing. He told me I need to find out what people would charge to get Authorize.Net integrated into it. He would take care of the design, shopping cart, etc.

The results – I spent a few days making calls to my competitors and if someone didn’t answer, I tried to call back several times over that period. Out of the 11 companies I called, I actually spoke to 4 of them. I left messages and others didn’t return my calls. I will provide the results in a table below. I won’t list real prices, but instead will give a representation as bushels of fruit.

Company Services Included Cost
My company As mentioned previously in the post 2 Bushels
Company A Same services as ours 4 Bushels
Company B Integration only and we would be responsible for capturing the data, validation, and thank you page 6 Bushels
Company C Integration only and we would be responsible for capturing the data, validation, and thank you page 4 Bushels
Company D Would not tell me anything and instead sent me to a form on their website Refused to give me an estimate until I completed a form on their website

After all of my calls, I was pretty shocked at the results. “Company A” was the company that offered similar services to us even if their cost was double what ours was. Their representative was extremely professional, knowledgeable and honest with his answers. If for some reason we were too busy to take on any integration work, I would have no problem referring someone to them.

“Company B” was a joke. He did return my call which was a plus for him, but he made the work involved sound so difficult. Granted, I was portraying a naive home-based business woman who knew nothing about websites or eCommerce. But, he was really laying it on thick. So I got right to my point, “How much would it cost?” I asked. He said, “If you provide the checkout page, all of the validation, and the thank you page, i can provide the integration for ONLY 6 bushels.” Yes, he really did say ONLY. I vomitted in my mouth a little bit when he said that but I politely thanked him and let him know my programming-whiz brother would be in touch if he had more questions on the technical side of things.

“Company C” answered the phone “Hello?”. So I asked if this was “Company C” or had I reached the wrong number and he said, “yes it sure is.” So, I proceeded to tell him my story. He didn’t seem extremely knowledgeable but his solution was the same as “Company B’s” — just a couple bushels cheaper. Needless to say I wasn’t impressed. He wasn’t professional at all and I felt I was actually disturbing him.

“Company D” was very polite and knowledgeable. The thing that really turned me off about them is they refused to give me any information over the phone and instead insisted I fill out this 6- page form on their website. So I explained that I didn’t want to fill out a form and I could give them all of the info on the phone and I just wanted an estimate and I realized it may not be exact. Sorry, no deal. So, I go to their website. I look at their form and without filling out a thing, I go to the next page. Interestingly enough, it let me through without telling me that I missed some required fields. I go through the entire form without filling out a single form element and hit submit and I get a congratulations message telling me my request has been processed. At this point I just start laughing. If I’m a client and I see this, I would have serious doubts about how secure they will make my pages.

Lessons Learned

1. Answer the damn phone :D. I wonder how many jobs we receive simply because we answer the phone when someone calls us.

2. Price competitively. Out of the bunch there was only one who actually seemed like a viable competitor with us and they cost double what we charge. I don’t think their cost is unjustified or inflated at all and in fact we could probably get away with charging the same thing. But, we built our codebase smart and streamlined our process to maximize reusability, so our solution can be implemented faster than theirs (most likely). This is why we can get away with charging less.

What do you think about checking up on your competitors? I wouldn’t be surprised if ours have done it to us and I welcome it because I am confident in our level of service and our prices.

9 Responses to “Keeping Tabs on the Competition”

1 John

If I’m a client and I see this, I would have serious doubts about how secure they will make my pages.

Actually, you’re probably overestimating the capabilities of many ordinary (non-technical) clients. Sure, some will be clued up enough to realise this is not a good thing, but there’s probably just as many who wouldn’t.

2 Kurt

“What do you think about checking up on your competitors?”

Since you asked I will go ahead and share my thoughts. I keep regular tabs on my competitors by reviewing their website, product offerings and even through email correspondence with those I know and have developed a professional relationship with. However, I would feel very uncomfortable engaging their time while posing as a potential client. Something about this does not sit well with me and I would rather do business without the benefit of knowledge gained in this manner.

3 ses5909

Kurt — I was on the fence about this issue too. Ultimately, obviously, I decided to move ahead. Was it the best decision? I don’t know. I think it was my motivation for doing it that pushed me to the side of the fence that I was on. I was not trying to garner information about my competitors to use against them or to better compete with them. We were already landing 100% of the leads. My only motivation at this point was curiosity. Had it been because i wanted to undercut them; i would have been uncomfortable with the situation.

4 Golgotha

“I was not trying to garner information about my competitors to use against them or to better compete with them.”

I would have no problem with it, if you had. It’s called competition for a reason…

There’s nothing unethical about researching your competition and it would be irresponsible not to do so.

5 TOMAS

I would have to agree with the last two comments and agree that calling solely with the intention of finding out publicly available information shouldn’t be unethical. Doing so for any other reason is questionable.

As for researching the competition, it’s something that should be done and is actually recommended in many entrepreneurial courses since you want to ensure that you are properly differentiating yourself from the competition. Ultimately, to copy the competition will hurt only you and not your competition IMO (also see this article by Small Business Branding).

BTW ses5909, which Authorize.net certified developer are you? I might need your services in the near future so just drop me an email when you get a chance.

🙂

~Tomas

6 Dan Schulz

Definately check up on the competition. As some of you know, I’m in the Chicago suburbs (I won’t say which one for what will about to be come an obvious reason), but a “Web design company” moved in here a couple years ago. Not too long after they moved in, other “design companies” started sprouting up. A quick check of their Web sites revealed the EXACT SAME CODE as the site for the first “company” to show up in town. So I walked past their offices (which reeked of marijuana that day) and noticed little paper signs for ALL the “companies” on the front window. Hmm… something’s not right here, and I’m not even designing or building sites for local clients.

Maybe I should start before it becomes too late.

7 Paul Glover

I know we’ve had competitors check us out this way, and we’ve done the same. Seems like normal business intelligence to at least have *some* idea of who else is operating in the same market and how you stack up against them.

What bothers me is how few were even reachable. This has worked in our favor on one occasion we know about, and no doubt many more we don’t. We had one lead who wasn’t going to buy from us when he saw our prices. “Well,” he said, “I can get the same thing for less from one of your competitors”. Which is true enough, they’re the cheapest by a wide margin, but we know how reliable that competitor is, and weren’t entirely surprised when our lead called back a week later and became a customer, because he just couldn’t get a hold of the other guy at all.

There’s no point undercutting everyone else in your market sector if you don’t respond to inquiries.

8 ses5909

@Paul – yes, it was completely shocking to me. With each call I was just flabbergasted. To me it makes sense to answer your phone if you are there and if you aren’t, at least return the call. If you’re too busy and not taking on new clients, that is fine, just tell the caller that.

9 Annie Banks

If it is unethical to call you competitors to find out how much they charge, how else can you find out what is a fair price to charge? I am working on a business plan for a worksite wellness consulting company, and I have no concept of how much to charge clients (small businesses), since I have previously worked in academia. Any suggestions?

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