Price as a differentiator
Earlier this month I promised to blog about this. In my previous blog I mentioned that competing with other businesses for customers was hard work and in order to differentiate their business, business owners might offer the lowest price or they might offer new and innovative products and services.
Now, I realize that not all industries or businesses have a choice in the matter, but if you have any say in the pricing of your products, let me encourage you to avoid selling as “the lowest priced”.
When you make the lowest price your main selling point, you end up getting customers who only care about price. And to be frank, customers who only care about price are the most fickle kind of customers you can have. As soon as a lower-priced provider comes along, they will leave you and switch. And if you think that no one can possibly offer a price that is lower than you, just wait about 6 months. It will happen. It’s a given, like death and taxes.
Not only that, but your profit margin (obviously) will be at risk. You’ll be earning pennies against your competitor’s dollars. You might win more clients but you’ll be working harder for less. Your higher priced competitors are serving fewer customers, working less, spending more time with each customer, and earning the same profit. That’s not a good equation for you.
Instead, offer creative and innovative products and services. Instead, offer amazing service. Instead, offer crazy convenience and ease-of-use.
Now, having said all that, let me say this: I’m not suggesting that you should stick it to your customers and charge as high a price as possible. Nor am I suggesting that having a lower price isn’t a good thing. What I am saying is that you need to take the focus off of the dollar sign and put it on the value equation. If you charge the lowest price, great. Just make sure you get enough profit and make sure that the client is appreciating your business for the value you provide and not for the money they’re saving.
Clients who buy for value – which is the majority of clients (excluding, of course, the few that only buy for price) – are far better clients to win and keep. Yes, you might have slightly fewer clients than the lowest-price provider, but I promise you: your clients will be more loyal, you will work less, and your profits will be as high or higher than that low cost competitor’s.
Until next time,
Jessica Routier, IAC-EZ
