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When you Can't Be the Cheapest

by LegionNate
10 replies
I wish I were coming here with advice instead of asking for it, but I hope this can spawn a good conversation. I've seen a LOT of threads lately on pricing, and not selling yourself short. Mostly however they were geared toward people selling SEO services offline and charging what you're worth.

Well, I am going to be selling a physical product online, where in reality I only have one competitor (maybe two, but really just one real player). Ironically they are also local to me, but these are nation-wide sales.

My competitor manufacturers this product and sells it for about $330, free shipping. I too am manufacturing this product, and could also sell it for $330, but honestly I think they are getting it all done for a bit cheaper than I am. I realistically think I need to sell it for $350-$360, but honestly think I'd need to sell it for $380ish to get the profit margin I want. I would say the two products are essentially identical... and to make it any better would also cost more money.

What kind of things do you guys do USP-wise, when you simply can't be the WalMart on the street, offering things for dirt cheap prices? I'd love to hear some ideas.
#cheapest
  • Profile picture of the author JohnMcCabe
    Nate, nothing specific is coming to mind, so I'll leave you a question to ponder...

    Rather than wondering how you can compete at ~10% higher prices, ask yourself how you can package and position your item to make it worth $700 or $1,000.

    Toyota tried that - how could they sell a $50k Toyota? Call it a Lexus...
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  • Profile picture of the author jonmay
    What makes you better than your competitor? That's what you got to ask yourself. If you have the same product essentially, you need to do something better than the other guy! In my hometown, there are many grocery stores but my wife and I usually shop at Publix even though it is a little higher priced than the others. Why? Because it is a pleasant experience, it's clean, people are friendly, etc. So you need to provide something that is excellent, CUSTOMER SERVICE is a big one, packaging, instructions, something to that effect and then you can charge your higher price and be proud to do so.
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  • Profile picture of the author TheArticlePros
    Jonmay hit the nail on the head. I ran a booth in a mall for 10 years selling cell phone accessories. I often sold my chargers for $29.95 all day long, my faceplates/covers for $19.95, and leather cases for $24.95. I paid $1-$2 a piece for them, and they were sometimes the same ones you could buy down the hallway at the dollar store.

    I did $150K/year in sales. From a 7'x10' booth in a mall.

    Why?

    I never sold the products. I sold me. I sold my store. Instead of being Jason, I was The Phone Guy (literally, I was The Phone Guy, Inc.). People came to me because I gave them one-on-one attention and excellent customer service, and I knew my stuff. They'd rather spend $20-$30 on accessories with me because of who I was to them.

    I'm doing the same thing on here with JaRyCu. (How many of you knew my name was Jason? LOL!) I have enough posts now so that most people know when I post, I'm going to give decent to good advice, or a good joke.

    Do that with your computer brand. Make people buy your service. Don't worry about your competitor's pricing; s/he doesn't have what you do. Make the customers understand that. Apple doesn't worry about Dell or E-Machines.

    -- j
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  • Profile picture of the author alamest
    I agree with Johnmccabe that make your product that much worth than people will be willing to pay more than $400 and so on.

    If it is physical product than why not try to add your product in amazon and see what is the reaction from the people and it is great way to see how your product going on in the market
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  • Profile picture of the author oda
    Could Not agree more with the above Posters Jarycu and Jonmay.

    NO ONE sells you, You are your Own USP.
    Add value by adding service, support and personality.

    Great Advice Jarycu and Jonmay.

    Oda
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  • Profile picture of the author LegionNate
    That's some great advice guys, I'm going to be pondering that here. In fact, after going back to my competitor's site I have realized one thing already. They have a 2-3 week lead time after you order, whereas with the way I do things I can ship out people's products in 1-2 days.
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  • Profile picture of the author John Romaine
    Outperform them with your offer.

    Value add the **** out of it, to the point where its a no brainer for your buyers.

    If theyre offering blue widgets for $330, then make your offer blue widgets plus red widgets and a free widgets fridge magnet and colouring in book for $500.

    Of course this is just an example, but do you get my point?

    In the past I focused too much on lowering my price, when a better strategy wouldve been adding more value to the product.

    Avoid lowering your price just to be competitive. You dont need to (and probably shouldnt)
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  • Profile picture of the author TheArticlePros
    I forgot to mention this, but Wal-Mart allows its store manager to feature a certain amount of local product in its stores. You might could talk to your local manager and see if they're still doing that program and, if so, how you could apply for it.

    -- j
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  • Profile picture of the author LegionNate
    Thanks guys. I had thought about bigger distribution. Lowes and Home Depot were more along the lines of what I was thinking for this product.
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