Selling on Value: Why Companies Should Charge More for Quality

As a business owner, you understand the importance of selling your products or services with a clear value proposition. However, many companies struggle with the idea of pricing their offerings above the competition. This article aims to help you understand the benefits of positioning your business based on value rather than price, and provides actionable tips to create a strong value proposition.

The Pitfalls of Selling on Price

Imagine you are a business owner seeking proposals from salespeople. They confidently tell you that their products or services are superior to their competitors. You might hear:

"We are best in class. Our product/service solution is better than what you can find in the industry. We are very good at what we do; no one comes close to the service or value we provide."

When you ask how they price their services compared to their competitors, their response might sound something like this:

"We are priced just below our competitors to make sure we have a solid chance of securing the business."

Yet, if they truly believed in their value, wouldn't the pricing reflect that? The reality is:

"You don’t believe in your value, especially if you think companies who charge more for a better class of service exist. Consider this: if you want a basic room at a hotel, the price is X; if you want to upgrade, you pay more."

Here are two key takeaways from this:

Selling on price is a bad thing: Buyers can't determine if your product or service is better, only who offers the cheapest option. This is not where you want to be. Understand your value: If your offering is better, charge more. People who want value will pay your price.

Understanding Your Value

One of the most crucial steps in competing on value is to truly understand what makes your product or service unique. Here are some steps to help you:

Select a pen and paper: Write down all the features of your product or service that differentiate it from your competitors. Be specific: Avoid vague statements such as "we try hard to do good." Instead, focus on specific attributes that set you apart. Create a value proposition: Develop a clear and compelling statement that answers the question: "Why should we buy from you?" Practice: Ensure that you can confidently deliver your value proposition to potential clients or customers. Rehearse until it becomes a natural part of your conversations.

Conclusion

In the competitive world of business, selling on value can be a powerful differentiator. By understanding the unique value of your product or service and positioning yourself accordingly, you can command higher prices and attract customers who seek quality over cost. Embrace the challenge of selling on value, and watch your business grow and prosper.