I hear from businesses all the time about the challenge they face in competing against lower-cost competitors in the marketplace. It seems like businesses must choose to be either the low-cost version or the non-low-cost version. It doesn’t seem like there’s a middle ground…
… But there is a middle ground.
It is possible for you to be the low-cost provider without charging the lowest price.
It comes down to educating your prospects earlier in the sales funnel about the true price of the product or service they are shopping for, and then showing how your higher-priced product or service is actually a lower-priced option than the competitor with a seemingly lower price tag.
Let’s say that Competitor A is selling a product for $25, some assembly required. Meanwhile, Competitor B is selling their product for $50, installed.
A customer who is shopping for the most competitive price will look at the price differential — $25 versus $50 — and possibly choose the $25 option because it’s cheaper.
But is it really cheaper? They have to pick up the product at the store, ship it home, put it together, and install it — an effort that could take all day (and perhaps some additional costs in fuel for transporting the product). Factor in a little sweat and cursing and the annoyance of trying to interpret the assembly instructions, and suddenly that $50 is potentially a more attractive offer.
Unfortunately, businesses get caught up in price-tag comparison and they assume that their prospects are also doing that. It’s true, prospects ARE doing price-tag comparison… which is why the business needs to dial in more education earlier into the sales funnel. Marketing and sales efforts need to be directed toward educating prospects about the true cost of acquiring a product or service and showing how the price tag might be lower but the real cost of the cheaper option is much more expensive.
That’s why you can still offer your product as being the “lowest price” even when it’s higher than your competitors because the metric you are using to measure “price” factors in far more than just the number on the price tag.
To implement this in your own business, take a look around your marketplace and see who your low-price competitors are. Compare their offering to yours. In some cases, there might not be any difference; but there’s a good chance that there are many reasons why your higher-priced offer might still be a more attractive alternative. Then stop selling on price alone but bring the other qualities and benefits you offer into your marketing. Ensure that prospects are doing a full and fair comparison on the true costs instead of the price tag.