better business blog

Tips and stories to add value to you and your organisation

Do You Sell On Price Alone?

2 February 2014

This a tale of two cheeses. It was the best of cheese, it was the worst of cheese. Ok, that’s enough cod-Dickens for now and it serves to introduce a dairy-based learning point this week…

Do you only sell your products based on them being cheaper than your rivals?

Many people do, often in the mistaken belief that they are in a commodity market and therefore customers will only choose to buy their products or services if they are the cheapest.

However, people don’t make rational decisions and are much more influenced by emotions and convenience than they might admit to. For example, in a local food shop they have special offer cheese by the front door. If you choose this cheese and put it in your basket you’re more likely to ignore the regular priced cheese, two rows away. However, a quick look at pack weight says that the special offer cheese is actually more expensive, kilo for kilo (I’m sure Dickens would have moved with the times and used modern weights and measures).

The point here is the special offer cheese is supplied by a big name brand and has been heavily marketed to promote it’s champion cheesy values.

The price difference between the two cheeses isn’t much, but there is a difference and this means people are not really making ruthless shopping decisions based solely on price.

As the great Theodore Levitt (marketing top banana) said “anything can be differentiated”….and this means telling our customers what makes us different, special and worth the money.

Doing this enables us to sell to people on a combination of price and value-adding differences. Our price might only be £0.50 higher, but it’s still higher! If we sell on price alone then we’re going to have a race to the bottom and that’s no way to build a sustainable business.

So, this week think about what makes you and your products and services special. Why would I be willing to pay 50p more for them?

Next week: CV For 2015