Small Business Talk
The Podcast to Grow your Business Faster
Are You Adding Value?
Show Notes
Most small owners spend a lot of time worrying about their price and pricing. Many have no idea but the cost of producing their “thing” especially when you are providing a service. They spend way too many hours working and when their accounts are done at the end of the month, quarter or often year, they realise that they have been working for almost nothing – a very small hourly rate. For many small business owners, they would actually be better off having a, you know, dirty word – JOB!
So, why do we do this and what is the solution?
Start with Value
Think about the value you are providing. Often when customers buy it has very little to do with price. Yes, 2 identical products side by side you will always pick the cheapest one. But think about it, it is still a value proposition because there is no extra value in the more expensive one.
What Value Are You Giving Your Customers?
Do you have a straight transactional service or are you adding extra value?
For example sports apparel brands do this well. You can buy a similar style of sports top at your local department store for often ¼ of the price.
However, most people won’t, why?
It’s Perceived Value
Is the brand name version
- 4 times better
- 4 times the quality
- 4 times the life span
- 4 times better/more ethically made
Probably not.
Plus often, if you are really fashion conscious, the new season’s stock will be out before you have outworn the current version.
Most people buying sports apparel will just go to their favourite outlet buy the garments on offer without a second thought to the price.
It’s about the branding, the style and the value that they feel they are receiving. Yes, the cheaper “no name” version will do the same job more than adequately however it will not make them “feel” the same. Customers remember how your brand/product/services make them feel long after the price is forgotten.
Long time listeners of the Small Business Talk podcast will know I am a tea snob. I like fine tea. I have a teapot that I brew loose leave earl grey tea in every time I have a cup when I am at work or home. For my tea, I buy premium quality T2 Earl grey tea. Organic Early Grey when it is available and always loose leaf. Yes, I pay a premium price for i.
But I love it. It gives a little smile every time I open the tin (yes, tin not jar) to teaspoon the tea leaves into my tea pot. Early Grey is black tea infused with Bergamot so the fragrance wafts up too.
Yes, I could buy plain black tea leaves or heavens help us tea bags (Yes, I said I am a tea snob) however, I choose not too because of the value I received from my lovely cup of tea.
How is Your Product Different?
A question I ask all my consulting client is “Why should I buy from you?” What makes your product different? No matter what you are selling (with very few exceptions) your customers have many other people that they can buy from.
What is your point of difference and what makes yours the ultimate choice for your ideal customer. Pause on that for a second and think about it.
Trust
We buy from people we know, like and trust. This is being really overdone and you see it everywhere but it is true.
If you don’t trust that the person/brand/website can deliver what they are promising you will be very reluctant to buy and will probably look for another option.
If you have a serious illness, you go to the doctor to get referred through to a specialist in the exact field of your illness. You are looking for an expert, someone who knows their stuff and that you can trust will help you.
That is also how we buy products and services and the higher the price point the more we need to feel that trust.
Does Your Price Match Your Value
Often, we are worried that our price is too high because we look at other selling similar products for much lower prices. The question to ask in that situation is, are they really a similar product?
Are they providing the same outcome?
Are they giving the same value?
On more than 1 occasion after not winning a proposal, I have asked for feedback and why we weren’t chosen as the supplier. To my surprise and horror (especially the first time it happened), I was told it was price.
But not what you are thinking –it was because we were too cheap and they were worried that we would not be able to complete the job to the standard required for that price.
The mistake we made was not demonstrating the value that we were going to offer and it was judged on price alone.
Look at your value not necessarily what others are charging. Also, look at what is included in your pricing and make sure you convey that to your potential customers in a believable way.
We have all seen the
- And you get..
- And..
- And…
- And…
That goes forever. Our total bonus included the normal price would be $50,000 but for today, only you get it for the amazing price of just $999.
Yeah, right.
It might be an amazing offer they might over deliver, it might be full of value but it’s not believable so you don’t trust them.
Wrong Price
Brooke Castillo from The Life Coach School says there are only 3 reasons why your product won’t sell:
- Wrong Product
- Wrong Price
- Wrong Person
You will never be able to sell a BMW to a mini fanatic and never be able to sell a car of any type to a 10 year old boy looking for a push bike.
So think about adjusting one of these ideas at a time. If it is price that is the issue, is it really the price of the lack of preserved value for the price that you are asking?
Lots of Food for Thought
Are You Adding Value?
Listen to Small Business Talk Episode 090 for the full episode.
Have a wonderful week, see you next week on Small Business Talk or if you need help with marketing, look me up at CATCO Enterprises.
