Many years ago a friend of mine purchased a new european sports car. It was a sleek and stylish convertible bound to turn heads as he drove through the City. One problem, he lived in Denver where the freeway can be covered with salt and sand for many months of the year. Not willing to park his car for half the year, he invested in a clear acrylic covering to protect the front end of his new toy.
Many companies offered the service he was looking for. He finally decided on a shop that, although higher priced, came very highly recommended. Rather than just drop his car off, my friend decided to wait while the service was performed. Since it was a small shop, he was able to watch the technician apply the covering. My friend struck up a conversation with the technician as he worked that went something like this:
“So, how did you get into this work?”
“Oh, I started out doing work in a body shop, and people liked my work. One day the owner of this shop approached me and offered me a job because he heard I did good work.”
“Do you like the work?”
“I love it, I get to see the finished product, and see that my work is good. I get a lot of satisfaction out of that.”
At this point my friend noticed that the technician was having trouble getting the acrylic coating applied correctly to one of the fenders. The technician had applied, and removed the coating twice, and then had to start with a new sheet of the acrylic coating to be applied to the fender. My friend at this point remarked, “Well you certainly came highly recommended, but your price is quite a bit higher than some other shops.”
The technician stopped, and looked my friend in the eye, and said, “Yea, there are a lot of shops that charge less, and let me tell you, they are worth every penny.”
Are you offering your customers lower priced services that are “worth every penny” or are you differentiating yourself from your competition in meaningful ways?
As business owners, we often complain that customers always want the lowest price and overlook quality. There certainly are customers that feel that way. I argue, however, that these customers are decidedly in the minority. Experience has proven, time and again, that there are many more customers who are willing to pay for a premium product.
I am a business owner, but I am also a customer, and there are plenty of goods and services for which I am willing to pay a premium. For example, I travel frequently, and so I park my car frequently. I park at an off-site parking lot, which costs a little more, for several reasons:
- They pick me up and drop me off at my car.
- The drivers are always pleasant and courteous.
- They offer me a bottle of water (always).
- They have Valet parking for a few dollars more, they clean the snow off the car, and have the car warm and running when I return (a big plus on cold winter nights).
Not only am I a very frequent customer, I am also an avid promoter of their service. I have friends and relatives who travel frequently as well, and I always recommend my favorite parking lot to them as well.
The point is that I am willing to pay a premium, when provided with premium goods or services. We can all point to areas in our personal and business dealings where we knowingly pay a higher price for items we believe to be worth the price, or often more than worth the price.
Are you charging a premium price for your product, or are you stuck trying to be the lowest bidder? If you are competing only on price, and you would like to establish your product as a premium product, ask the following questions:
- How is your product different than your competitors?
- Can you clearly explain the positive differences of your product?
- Is the difference worth a premium price?
- Are you conveying that message to the customer?
- Are you willing to work to get a premium price?
For nearly every product, in every industry, there are a few competitors who consistently charge premium prices by clearly separating themselves from the competition. These are market leaders who understand that customer will gladly pay a premium price for products and services that are worth every penny!
Scott Murray helps janitorial and service business owners make more money, have more free time, and enjoy their business. He does this by helping companies add value to their products and services, and create outstanding customer service experiences that are worth every penny.