Money Talks: The Power of the Right Price
Posted 27 September 2016 by Stacey Papp
From “extreme couponing” to squeezing as much free coffee out of a Starbucks reward as humanly possible, people go to serious lengths to save money. A quick Google search brings up some fun/weird examples of how far we’ll go to save a buck:
- A Google worker lives in a truck in the company parking lot
- An office worker secretly slept behind his desk for more than a year
- A man commutes 713 miles from Spain to England to avoid paying London rent
- A trucking company in England maxed out on truck length to save on gas
These are not your typical penny-pinchers, of course, but it’s pretty standard for most of us to save coin when we can. A survey
taken in May 2016 revealed some interesting things about the overt cheapness of the American psyche – including that we are more likely to attend events if free food and drink is being offered; we steal items like napkins and sugar packets from restaurants; we pilfer blankets and light bulbs from hotels; and we unplug home appliances to shave money off the electric bill. If it’s free, it’s for me, and the cheaper, the better, right?
Well, no. Not all the time.
Sometimes you should actually spend a little bit more money to get something of much better quality. Some products that come to mind are walking/running shoes, kitchen knives, power tools and mattresses – these are all items where you’re going to want to spend more than you think you should/more than you probably want to, or you’ll regret it later. Anyone who has ever skimped on a mattress or a chainsaw knows exactly what we mean.
In fact, some brands are not shy about advertising that, yes, they are more expensive than the average product, but it’s because they are insanely well made. Dyson is a great example of that, and stands behind its pricing with lengthy warranties, education on the technology and product quality via marketing efforts, and products that are so innovative that they almost make it a joy to vacuum ( … almost).
Another reason the company has done so well despite its high prices is brand loyalty – anyone who uses one of its products will almost certainly not go back to the cheaper competitor by choice.
It’s important for any business to have competitive pricing, but it’s also OK to charge more than the other guy, or raise your rates from time to time. Just make sure you and your employees are able to clearly explain, on your website and in person, what makes your company’s product or service the superior one – your value proposition.
Answer the below five questions to create your value proposition, and you’ll be ready to present the answers to your customers if they ever question your price:
- Why is your product or service the best in the market?
- How do customers feel about your company?
- How does your company compete on product features, customer experience, style, speed, etc.?
- What do you offer that your competitors don’t?
- Why should a customer pay more for your product or service?
With these five questions, you should be able to convince your customer that they are making the right decision selecting you instead of the other guy, and will keep coming back to you – as long as you can walk the talk when it’s time to deliver.
And don’t forget there are tools
out there that will add to your value proposition by making your business more efficient, improving customer satisfaction and letting you get more jobs done in a day without sacrificing quality of service – and they can even help save you money by tracking fuel costs and vehicle maintenance schedules.
Those sugar packets you “borrowed” from the diner might save you a whopping $.40 a year, but using technology like fleet management software can get you a little more bang for your buck – and that’s priceless.
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