Upside-Down Thinking by Patric Fransko
by Patric Fransko
July 21st, 2015

Market Your Value, Not Your Price

I wish I had a dollar for every time I’ve seen an argument break out between two parties about what one of them was charging for their services. It usually centers around one of the parties feeling that the other party is selling the product or service for too little, hurting the market in the process. This ends up being a never-ending battle and often ends up in a price war that’s not beneficial for either company.Fransko1

While this sort of interaction is all too common, the underlying focus is entirely wrong. To quote Warren Buffett, “Price is what you pay. Value is what you get.”

Even when dealing with a highly-commoditized product such as gasoline, there’s still room to market the product’s value over its price. How often do you see two gas stations on the same corner that offer their gas at different prices? In my area, Shell and Chevron routinely get $0.10 more per gallon on the same intersection as other branded gas stations. The interesting fact is that many times, both stations tanks are being filled by trucks from the same refinery.

They’ve used marketing the value of dealing with their brand to such a degree that many people willingly pay $2- to $5.00 more per fill-up for the exact same product. How do they accomplish this and what can we learn from them?

Here are three ways to change the focus from price to value so that you can make the sale:

  1. Focus on the Details

These brands differentiate themselves is by focusing on the details, no matter how small. For example, brands selling gasoline for more money talk about how their cleaning agents keep your car running more efficiently.

Is this meaningful and relevant to a typical purchaser? Probably not that much, but they’re creating a differentiation between the perception of their gallon of gas and the competitors’.
This isn’t about deception. This is about highlighting the positives of your products and service. I also recommend staying focused on discussing your product or service without talking negatively about any other products or competitors. The customer needs to understand what they’re getting from you so that they can differentiate it from other offerings.

  1. Act the Part

If you want to project the image of being a better value, you need to look the part. Does your facility and your employees look the same as the lower priced competition? Typically, the brands charging more for gasoline have the most up-to-date service stations. They have inviting mini-marts that are well-organized and carry the items and brands for which customers are looking. They also have clean men’s and ladies’ restrooms. A customer will gladly pay a bit more at the pump to have clean facilities available for their use as they “value” the convenience of that one stop that provides for all of their needs.

  1. Don’t Be Wishy-Washy

Know what your product or service is worth and charge accordingly. Do not engage in chasing the sale. If you feel the sale might be slipping away, and you offer a better deal to get the business, it will undermine everything you’re trying to do when building a brand. If the customer begins to believe that your price is negotiable, they’ll push you for the deal all the time.

The better approach is to do all the things possible to build a value that corresponds with the price you are asking and then stick to your guns. If you compromise on this, the customer will expect you to deliver on all of the value that you explained to them, but at the lower price. If you want to be in the value game, don’t compromise and allow people to trick you into playing a game you did not build your business to compete in.

As a business owner, you must decide which path you will take and then build your business to succeed on that path. For me, I’ll choose building value over slashing prices every time.

 

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