The Price is Right When the Value is Visible
Pricing is something a lot of businesses struggle with, from startups and solopreneurs to major players that have been in their industry for decades.
The best businesses—the ones that create the most value for their customers, their shareholders, and their team—are the ones who learn that finding the right price of relatively little importance when the quality offered is top-of-the-line.
Look at the leader in almost any industry, and you’ll find one of the highest-priced providers out there.
Apple’s devices (ignoring all the recent hubbub about the newest MacBooks) and the company’s in-store efforts deliver an experience that millions are willing to pay a premium for, and Apple is sitting pretty on plenty of profits despite the hefty price tags they place on their products.
Adobe makes a bunch of the software that keeps the world running and gives it away for free, but when it comes to things like Photoshop, Premier, and the rest of their Creative Suite they charge a pretty penny—and people pony up the dough because their software is among the best around.
Ritz-Carlton of hotel fame. Tesla and its unique technology. First-class flying on any airline that offers it. They all cost a bundle, and they all have bunches of customers happily shelling out the money.
Price the Experience, Not the Commodity
All of the premium brands mentioned above have more in common than being among the most expensive operators in their industries. They all also strive to give their customers a total luxury experience.
They compete on value, not on price.
Instead of worrying about losing customers by charging too much, or making margins as razor-thin as possible to capture market share, these companies produce the best product they can and charge whatever the market will bear for delivery—because they and their shareholders don’t deserve anything less for the value they provide.
You need to be approaching your business in the same way.
Chances are, if you’re reading this blog, you’re trying to do something new and disruptive already, not just trying to sell a cookie-cutter commodity that twenty other companies are already producing.
Your unique value is what you’re selling.
Don’t price yourself based on what the competition is charging, because you’re not the competition. Don’t price yourself based on what your most price-conscious customers demand, because they’re going to deliver the least amount of value to your business.
Price your service so that the customers who will get the most value will also be willing to give it, and sell them on the value, too. Companies that compete on price are always on a race to the bottom, and the most they can hope for is to find themselves in the middle of the pack.
If you’re producing enough value, price should hardly be a consideration at all. And if you’re not producing enough value, what are you doing in business in the first place?