Have you ever bought a bag of pre-washed or assorted lettuce at your local grocery store? Did you know that, depending on the season, it costs anywhere from 5 to 10x more than a head of iceberg lettuce or romaine? So why the heck do we pay the extra? It’s because the lettuce company knows how to do it right; Price for Value!
Buying the pre-washed lettuce, despite the higher cost, saves us time, (in the end) saves us money, solves a real problem, provides peace of mind, and creates a feel-good.
If you’re in a highly competitive market where your margins are constantly being squeezed, all you need to do is price for value and find your lettuce. In the wild-west days of cell phones, back in the early 2000s, it was all about who would discount the handset or the minutes the most. Then along came Blackberry (for a time) and Apple. They provided the “lettuce” that the plethora of other cell phone manufacturers didn’t offer. And where are Motorola, Nokia and so on today? They’re in the composting heap, with the other vegetables.
Here’s how you can price for value and find your lettuce:
- Save Time: When I worked in the wireless industry back in the hyper-competitive days, we showed our customers how our handset could eliminate 2 hours of checking voicemail every day. Do you think that the executives making the decision cared about cents per minute of airtime?
- Save Money: This has nothing to do with discounts and everything to do with value-add. If you can show a buyer how your product or service may cost more upfront but save them money over time because it’s easier to use, more efficient, or has a longer mean-time-to-failure, you’ve got a great story to tell.
- Solve a real problem: Bagged lettuce lasts longer because of the special chemicals in the packaging. That solves a multitude of problems – if you’re single, you don’t have to throw rotten lettuce away. If you’re a camper, boater, or someone else who needs lettuce to last beyond the norm, you’re willing to pay more. Often we get caught up in our own features and benefits. Instead, focus on what your product or service actually does for the customer, find the problem you solve better than anyone else, and price for value.
- Provide peace of mind: Every buying decision comes with a risk. That’s why in the old days, IT managers used to say “Nobody ever got fired for buying IBM”, and IBM often won the day, even if it was not the best technology or lowest-priced solution. If you have brand value, a higher quality product that won’t fail, a better guarantee, or simply a “whatever it takes” approach to customer service, you can play the peace of mind card.
- Create a feel good. At the end of the day, most decision making is made by the emotional right brain, then justified by the logical left brain. If you’ve paid a lot more to drive a luxury car with a quiet interior and leather seats instead of a cheaper model with rattles and cloth seats, you’ve already figured this out for yourself – now, go and figure out how to give your customers that type of feel good with the products and services you provide. Often, it has nothing to do with the product or service, and everything to do with the way the customer feels when they do business with you.
When you Find Your Lettuce and Price for Value, you create a competitive advantage that is extremely hard for any of your competitors to identify, let alone copy. And you create the desire amongst your customers to do business with you for reasons they may not be able to easily justify – they just know that they’ll do whatever it takes to pay your price to get what you offer, instead of saving a little bit here and there. Once the pressure is off your margins, you’ll see easy top-line growth on an ongoing basis.
#1 Bestselling Author, International Speaker, and Accelerator Anne C. Graham is on a mission to help 5 million business leaders and their teams double their profit per employee – or more – in less than one year, in less time per week than they’re spending on email per day. Her new book Profit in Plain Sight includes the 5-step proactive P.R.O.F.I+T Plan to do it. Connect with Anne on Twitter and LinkedIn.