For a small business, your pricing strategy should not be only about price. It should be about being different!
If your offering is the same as your competition then you allow ‘price’ be the deciding factor.
If you are different than your competition, and your customers value that difference and they will pay for that value.
If you are getting beat up on price, it means your business isn’t being perceived as ‘different’.
1) Be more different
2) Drop your price
Do I need to ask you which option is better?
For greater clarity – Pricing strategy is simply about being different! The difference must be in the minds of your potential customers. How are you perceived as different?
3 Types of differentiators
1) Actual differentiators – This is what is genuinely unique about your products and services or the way you deliver them. An example would be a real leather product compared to a vinyl product made to look like leather.
2) Created differentiators – This is something you create to differentiate your business from the competition. An example would be the best guarantee in your industry.
3) Perceived differentiators – Since perception is reality, it is possible to create a perceived difference just by being the first to position part of your offering as being unique. A great example is when Fed-ex stated they could get any parcel to its destination by 10:00 a.m. the next morning. Other courier companies were capable of doing this equally as well as Fed-ex, but by being the first to position this differentiation strategy to the marketplace, they were able to convince the market they are the shipping business of choice when your package really has to be there the next day.
The Fed-ex example brings me right back to my point.
When you really need to get your package there the next day, are you thinking about the lowest courier price or are you thinking about who will get it there on time?
Pricing strategy is simply about being perceived by potential customers as being different.