Judging how to price your service or product can be challenging, particularly in areas where rivals are pushing competitive prices. So, how do you keep your business out of a pricing competition?
Jonathan Jeffries, Partner, Think & Grow
When establishing your business venture, it’s important to know your worth. Competitive pricing is one drawcard for consumers when vetting their options, but it’s not the be-all and end-all. In fact, research has shown that consumers have a tendency to associate price with the quality of the product or service – so the higher the price, the better the quality. With this in mind, it’s crucial not to undersell and undervalue whatever it is you’re bringing to the table otherwise you’re starting off on the wrong foot.
The key to justifying your worth is to offer real and impactful value to your customers. Highlight your point of differentiation; show – don’t tell – your audience why you’re the best choice for them and exude authority, authenticity and confidence. On the other hand of the spectrum, ensure that your pricing structure is fair and reasonable. Overinflating your prices can be detrimental for brand trust and perception and, ultimately, bad for business.
Kate Save, CEO & Co-founder, Be Fit Food
Firstly, know your USP. If you’ve done your research, then your product should be unique enough that you’ll never need to compete on price unless you want a race to the bottom. Price shouldn’t be the leading decision when making purchases as there will always be a compromise somewhere else. Create a product that solves a problem and doesn’t compromise on your USP, therefore the value will be seen and the price will be perfectly matched to the product’s true value in the eye of the consumer.
Secondly, know your market. Rather than pitching to the masses, consider exactly who to target and what your product can offer that differentiates you from competitors. Find the pain points that people have with other competitor products and assure them that your product will take away their ‘pains’.
Lastly, educate rather than sell. When we educate people about the current choices on the market, as well as what the current science tells us is the best solution for their health goals, people self-select our product and don’t need us to sell to them.
David Curry, Chief Operating Officer, WLTH
Competing purely on price can be a dangerous strategy for a business, as it can often take away from your brand positioning and overall offering. However, when it comes to home loans, for example, having a great rate is what drives customers to make the switch.
While it is important to stay competitive as a business, it is very important to ensure you offer a premium service, and this is a great way to avoid competing on price as you are able to demonstrate value for money.
At WLTH we pride ourselves not only on our market-leading rates, but also on our service to customers and always being there to help them through the entire home loan process. Although we have a digital application process, we understand the importance of pairing customer support with technology, and this end-to-end support enables us to ensure that customers are getting access to the best products that are available to them.
Vijay Sundaram, Chief Strategy Officer, Zoho
Competing on price makes it easy to lose sight of what’s important—building value through differentiation. Look for value in three areas:
1. Position the product right based on its strengths. Go beyond its features and specifications, keeping in kind what the customer actually values. This could be reliability, product quality, simplicity-of-use, extendability, styling, durability, or some combination.
2. Look to extend your offering beyond the product and its capabilities. This could be complimentary services like advisory services, installation, or implementation that could raise customer confidence in your offer, while reducing their time-to-value.
3. Be the company people like and want to buy from. Build a lasting reputation for integrity, ethics, or other corporate values that people admire and want of the company they will readily buy from. Focus more on delivering that outstanding and value-driven offer rather than fretting over price.
Azadeh Williams, Founder and Managing Partner, AZK Media
The strength of any business lies in the true value you can offer others with your product or service. This is especially the case for agencies like ours when the value of our product or service offered is tied closely to business outcomes.
As an example: You could pay $5,000 for a video marketing campaign, or $50,000 for a video marketing campaign. Now, from that $5,000 low-budget campaign, you may get 10 leads for your business. But from a $50,000 premium video marketing campaign, you might get 500 leads. That’s $500 cost per lead, versus $100 cost per lead. That’s a big difference.
We see businesses making this mistake of constantly trying to fish around for ‘marketing and content on the cheap’ only to realise the price cut means a severe cut in the value and ROI they’re actually getting. In other words, pay peanuts and you get monkeys…
Billy Tucker, CEO, Oneflare
When selecting a business of any sort, capability, availability, credibility, and price are key considerations. Importantly, price alone is never the only consideration, but it often becomes the deciding factor when businesses fail to set themselves apart. Therefore, if a business can differentiate itself through intangibles such as capability and credibility, then availability and price, which are tangible, are less of a problem.
All it takes is for the business’s reputation to stand out as far as possible relative to competitors, making availability and price less relevant. Set yourself apart as the number one business and customers will wait and will be prepared to pay top dollar for your work.
Natasha Burns, Sales Director, Go1
Consumers and corporate buyers are certainly price conscious but it’s not the only deciding factor when buyers are making a purchasing decision. In recent years, and particularly over the past 12 months, ethical, quality and trust issues have become increasingly important. Many people will pay for more local brands and locally produced products, for example, than overseas produced equivalents.
There will always be buyers who chase the lowest price, and there will always be someone willing to cater for that. But in terms of building long-term relationships with customers and brand loyalty, customer service, quality and consistency are much more important.
Adding value is a key way to be competitive price-wise, but not actually lowering your prices. This could include bundling it with additional services, or offering discounts on future products and services. Moving from a one-off purchase price to a subscription model is also a way to offer great value while making a product seem less expensive at the outset.
Ultimately if your product or service is unique in some way, you shouldn’t need to compromise on its price, because nothing else can be exactly compared to it.