Welcome to our first weekly instalment of Phil’s Profit Points ™. We hope to help you improve your profits – in any business, of any size, in any industry.
Today, we’ll discuss how to use uniqueness as a value-based pricing strategy to improve profits.
How unique is your product or service? Can you articulate how you are different and better than your competitors? Value, quality, convenience, speed, service, flexibility? Note that I didn’t mention price. You don’t want to compete on price because you probably won’t win against the big guys who have economies of scale, deep pockets, and an unhealthy addiction to maximizing quarterly earnings at the expense of long-term sustainability and common sense.
If you are unique, you can use value pricing to increase your margins and provide your customers with higher value options and choices. Here are some examples.
High-end Retail: A custom-designed jewelry company can use value pricing because they are creating heirlooms for their clients.
Service: If you have a strong understanding of your client’s business and industry, you can create unique, customized solutions that will help your client to become more successful.
Manufacturing: You can warehouse, drop ship in small batches or hot-shot products to your customers so they don’t have to manage the logistics and inventory. This reduces their handling costs and working capital needs.
Construction: You can guarantee a fixed-price, on time, on budget, and great quality result. Our last kitchen renovation contractor achieved these, and we’ve referred numerous friends to them.
If you are a commodity, then you aren’t unique. You might need to price based on your competition, which is a horrible pricing strategy, because there is no limit to how low the price can go.
Make sure your employees and customers understand how you are unique and valuable. Being unique is the easiest way to maintain or improve your competitive position in a sea of low-priced commodities and competitors.
After all, strategy is the invisible combination of how you align your resources to deliver amazing products and services that help your customers to be more successful. Focusing on your customers’ successes, instead of just trying to sell them something, will definitely make you unique.
Copyright 2011. Phil Symchych. All Rights Reserved.