I’ve noticed that when I see something for sale that has a significantly higher price than other options in the same category, it challenges part of my mind to understand why the price is so much higher.
The first time I saw the $300 price for GORUCK’s GR1 backpack, I was kind of shocked. “$300 for a backpack!?!?! You’ve got to be kidding!” I literally had sticker shock.
By the time I bought one a few months later after literally saving up for it, I had done a TON of research to understand if that price was justified. Along the way, I completely educated myself on that company’s unique approach to designing and building backpacks, their unique lifetime guarantee, and every other bit of their marketing message.
The higher price challenged me to fully investigate GORUCK’s differentiation, and it worked. But that’s the world of B2C products, where the price is usually one of the first things you see and spending decisions are perceived more as costs rather than investments.
What about B2B services, where price is custom or usually not revealed until partway through a sales conversation and the context of a good deal is getting a return on investment? How can you use differentiation to support a premium price, and to prevent sticker shock when that price is revealed?
Part of the answer is that you can focus on discovering the value of that project during the sales process. If you’re not already regularly doing that, go to http://expensiveproblem.com, sign up for the Value Pricing Bootcamp there, and start learning how to.
The other part of the answer is your marketing. You can market your services in a way that differentiates them from cheaper options.
I’m going to give you some high level ideas now, and then drill into some more specifics in upcoming emails.
Here are three basic approaches to differentiation:
- Understand what benefits your clients associate with premium services, and focus on that in your marketing. This could be level of touch, could be responsiveness, could be quality, could be expertise, could be almost anything else. You really have to understand your clients in order to know!
- Know when to say “we’re expensive” or “we’re probably going to be the most expensive option”. I know from experience you can do this artfully through your marketing message and branding, but if you’re going to literally say the words “I want you to know that we’re expensive” you should almost certainly do it via a realtime voice conversation–not via email–and you should be very careful about how you say it.
- Position your business as a way for your clients to get more value because of your unique background, experience, inventions you’ve developed, etc.
If you’re not sure how positioning relates to value, you definitely need to read: http://thepositioningmanual.com
More tomorrow on differentiation,