Would you rather have a fast nickel or a slow dime? (Non-US readers: Nickel = $.05. Dime = $.10).
That’s the question a successful real estate investor asks when he decides whether to accept a profitable, below-market offer on a property, or hold out for a higher price. In his opinion, a fast nickel beats a slow dime every time. He takes the profitable below market offer to cash out fast.
Most sales books tell you to hold out for your best price.
I disagree. When I hold out, I generally get the pride of sticking to my price, but don’t win the deal often enough.
When I let the client feel like they’ve negotiated me down a bit, I might not get my best price, but I still make a good margin. And I close quickly. That’s a lot better than losing a deal because I priced it too high.
(Note to the anal retentive reader — your price still needs to be in the ballpark for you, not something that costs you money if accepted).
We are selling the invisible. Our pricing should always have some room for give — especially if you price on the high end, based on value.
So buck common wisdom. Take a fast nickel over a slow dime.
What if your client doesn’t respect you? Well, you still get a client, and if you play it right so that they think they are getting a good deal that won’t be repeated, well then, both of you win.
For me, the fast nickel beats the slow dime any day.
Frequently Asked Questions (FAQs) about Fast Nickel vs Slow Dime
What does the phrase “Fast Nickel vs Slow Dime” mean?
The phrase “Fast Nickel vs Slow Dime” is a business concept that refers to the strategy of making quick sales at lower profit margins (Fast Nickel) versus making slower sales at higher profit margins (Slow Dime). The idea is to determine which approach is more profitable in the long run. Some businesses prefer the Fast Nickel approach as it ensures quick turnover and cash flow, while others prefer the Slow Dime approach as it may yield higher profits per sale, albeit at a slower pace.
How does the Fast Nickel strategy impact cash flow?
The Fast Nickel strategy can significantly improve cash flow for a business. By selling products or services quickly, even at lower profit margins, businesses can generate revenue faster. This can be particularly beneficial for businesses with tight cash flow or those that need to quickly recoup their investment.
Is the Slow Dime strategy more profitable than the Fast Nickel strategy?
The profitability of the Slow Dime strategy compared to the Fast Nickel strategy largely depends on the specific circumstances of a business. While the Slow Dime strategy can yield higher profits per sale, it often requires more time and resources to achieve these sales. Therefore, businesses with high overhead costs or those in highly competitive markets may find the Fast Nickel strategy more profitable.
How can I determine which strategy is best for my business?
Determining whether the Fast Nickel or Slow Dime strategy is best for your business requires careful analysis of your business model, market conditions, and financial situation. Consider factors such as your cash flow needs, profit margins, sales cycle length, and competition. It may also be helpful to experiment with both strategies and monitor the results to determine which is most effective.
Can I use both the Fast Nickel and Slow Dime strategies in my business?
Yes, many businesses successfully use a combination of the Fast Nickel and Slow Dime strategies. For example, you might use the Fast Nickel strategy for lower-cost items or services to generate quick cash flow, while using the Slow Dime strategy for higher-cost items or services that can yield larger profits. The key is to find the right balance that maximizes overall profitability and sustainability for your business.
What are the risks associated with the Fast Nickel strategy?
While the Fast Nickel strategy can improve cash flow, it also carries risks. Selling products or services at lower profit margins means you have less room for error. If costs increase or sales decrease, it could quickly erode your profits. Additionally, constantly focusing on quick sales could lead to poor customer service or quality issues, which could harm your business reputation.
What are the risks associated with the Slow Dime strategy?
The Slow Dime strategy also carries risks. Holding out for higher profits can tie up your resources for longer periods, potentially leading to cash flow problems. If market conditions change or competition increases, you may struggle to make sales at your desired price point. Additionally, the Slow Dime strategy often requires more time and effort to nurture sales, which could divert resources from other important areas of your business.
How does market competition affect the Fast Nickel vs Slow Dime decision?
Market competition can significantly impact the decision between the Fast Nickel and Slow Dime strategies. In highly competitive markets, businesses may need to adopt the Fast Nickel strategy to stay competitive and maintain market share. However, in less competitive markets or for unique, high-demand products or services, businesses may be able to successfully use the Slow Dime strategy.
How does customer demand affect the Fast Nickel vs Slow Dime decision?
Customer demand is a crucial factor in the Fast Nickel vs Slow Dime decision. If demand for your product or service is high, you may be able to command higher prices and adopt the Slow Dime strategy. However, if demand is lower or highly variable, the Fast Nickel strategy may be more effective to ensure consistent sales and cash flow.
Can the Fast Nickel vs Slow Dime decision change over time?
Absolutely. The decision between the Fast Nickel and Slow Dime strategies is not a one-time choice. As your business grows, market conditions change, and you gain more understanding of your customers and competition, you may need to adjust your strategy. Regularly reviewing your sales performance, profit margins, and market trends can help you make informed decisions and adapt your strategy as needed.