A few years ago, my sister sought my advice regarding her new tailoring business. After she explained how she planned to operate, I asked her why she believed she was going to be successful. But her answer was unconvincing. She said she would make it because “tailoring was a hot business (based on her research).”
I pointed the flaws in her answer. I then advised her to come up with a strategy on she was going to make her business stand out. (There were other tailoring businesses in her vicinity.)
Lots of other entrepreneurs fall into the same trap: spending time dreaming of riches because their idea is “hot” instead of using that time to think of how to make the business stand out. When reality hits, they find themselves cutting prices to survive. Their competitors do the same resulting in price wars that eat profits.
There are, thankfully, other ways to compete without reducing prices. You just need to convince your customers to buy from you and not your competitors, even if your prices are higher. And that is what you are going to learn in this article.
1. Maximize Value
Imagine you want to buy a new smartphone. Both Store A and Store B are selling it at $99. Will you buy from A or B?
By just looking at the price, it’s hard to make a choice. So you will likely focus on value additions. Store A offers free shipping, has a 90-day warranty, and includes a pair of headphones with every purchase. Store B, on the other hand, only offers a 90-day warranty: no free shipping and no free pair of headphones.
If you are like many, you will surely go for Store A for its amazing value.
Whatever business you are into, you can apply the same concept to make your business stand out—add as much value as you can in the purchase. However, this comes at a cost. So carefully do your calculations and ensure that you do not reduce your profits significantly.
Here are a few examples of how value addition can be done:
* Full refund if customers are not happy with a product (most businesses already have this policy but are afraid to communicate it).
* Gifts (if you sell birthday cakes, you can include candles).
* Free installation.
* Free repair.
* Over the moon customer service (e.g calling customers to find out how they are enjoying your product).
2. Be Unique
Value maximization is a good strategy, only that it can be easily copied by your competitors. This is where being unique comes into play. When your business is unique, it means it has features others can’t easily copy. And you can charge higher prices as a result.
For instance, Benz is known for its solid, comfortable, and luxury cars. That is a unique feature, and the company makes billions off it.
You too must think of something unique in your business. For most people, this exercise is not easy. First, make a list of all your resources, skills, and knowledge. Now mark what you believe your competitors don’t have. For instance, if you have a restaurant, your 30 years’ experience as a chef for a top hotel would be a great unique feature.
You must, however, remember one important thing: the unique feature needs to be something your customers will care about. Or else, it will not make your business stand out in any way.
The more customers you have, the more money you make. Most business owners believe that. Unfortunately, that is not true in all situations.
The problem is that peoples’ needs differ. And this makes it extremely difficult to provide a product or service that fits everyone.
If you are a writer, writing about green energy for clients with solar businesses is better that writing everything for everyone.
When you are this focused, you can improve by channeling all your resources on your occupation. While you will lose some customers, you will grow as an expert in a certain field. And you will enjoy a huge market share as a result.
Of course, focus is not for everyone. But if you believe your business can accommodate it, then go for it.
I am sure this article has helped you discover how you can make your business stand out and stay competitive without cutting prices. The key is to ensure that you give your customers a reason to buy from you and not your competitors.