Peoples expectations/demands have risen whilst their cash flow/spend has taken a massive hit. Many people now have totally unrealistic expectations on price even when being offered a genuine bargain. There is always someone out there that will offer a service for peanuts and with people increasiningly "shopping around" that price becomes the perceived norm or benchmark. The old addage of you pay peanuts you get monkeys applies in many cases-but everything out there now is price driven not quality/service orientated although this is still expected. IMO we are in for a lot worse economically. Businesses will have to diversify in many cases to simply survive.
The BIG cause in all this is the banks-they are not lending a penny, are clawing back in overdrafts many businesses/individuals needed to facilitate cashflow and have strangled a massive number of small and even large businesses without a second thought whilst at the same time gratefully or rather ungratefully taking €57 Bn from the ordinary person and investing in government bonds at 5%.
I've had customers who I've been dealing with for years turn around in the last few weeks and started to acting like we're going in to business together for the first time when it came to new projects. They've looked to have the bills reduced by 50% and can't understand how my time is worth anything near what it was a few months ago. Its not like I haven't proven myself to them in the past, they know I can do the job and achieve desired results.
When it first happened it really caught me off guard, to the extent that I wracked my brain to think of what I could have done wrong in the past to decrease their perceived value. So I asked them directly "are they happy with what I've done so far?", everyone was extremely happy and satisfied, and said that is the reason why they want me to "stick around".
One really valued customer has really changed his attitude. Simple things like going out of his way to ignore and conveniently forget about things I would have done for him in the past. Always calling me up asking me for advice on this and that. So when they started to play the price game with me, I stopped bending over backwards for them. It's only now they are starting to realize how much I actually did for them.
I suggest that everyone stands their ground on price and do the best job you can with clients who pay.
My motto is that "Sloppy work is worse than no work for both the service provider and the client in the long run, and that's all you get in a price war".