If what you sell is considered homogenized—if it’s literally indistinguishable from what your competitors offer—then you sell a commodity. Common sense might lead one to conclude that in such circumstances, price point is what matters. I mean come on . . . if what you get is EXACTLY THE SAME, then why would you ever pay more.
Think about the basic commodities that you consume—water, gasoline, milk, sugar, meat. Do you shop for those things strictly on price? Once upon a time, the conventional wisdom was that commodities would sell according to demand-side economics. In other words, price levels would be fairly consistent across the board. Today, I submit that the theory of price wars on certain commodities is terribly misplaced.
Examples
Have you ever heard of Voss water? How about Perrier? Those are examples of commodity sellers who have taken advantage of the “wow factor” in a very big way. Think to an even more basic premise: Selling water. Traditional water was thought of as free, from the tap or a well. What happened? I’ll tell you. People—sellers—found a way to add value to what was otherwise perceived as a commodity.
Here’s another example. Shell gasoline. Shell has some of the most expensive gasoline around, but is Royal Dutch (the parent company) out of business? Far from it. They are doing quite well selling gasoline that is perceived to be a more valuable product. What do they do? They put an additive in the gasoline that supposedly keeps engine valves clean and motors running more smoothly. Does it work? It sure does for Shell!
The more expensive sugar (and the sugar with less completion, by the way), is now raw, unprocessed organic sugar. So they do less and charge more! The same is true of milk and meat. Organic is the new trend that commands a higher price in a smaller niche market.
Reinvent Your Business
If water can go from a totally free commodity to one that commands a premium over even gasoline, which is expensive to find, mine, refine, and deliver, then what is your business capable of accomplishing?
Where are you charging too little when you should be charging much, much more? The bottom line is that you have to integrate the WOW factor into your products and services in order to attract more customers. One they’re attracted, they’ll pay your premium simply because no one else was able to gain their attention. Find ways to be more valuable, and nobody will complain about price. And if some people do complain about price, you’ll know one thing for sure. They are not your target demographic. Pick who you want to sell to—visualize your ideal client—and serve that client. You can’t go wrong doing that.
The Parents Estate Planning Law Firm, PC
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