Stop Competing on Price — Compete on Value Don't make the mistake of leading with price and tying all conversations around it.
By Andrea Albright Edited by Russell Sicklick
Opinions expressed by Entrepreneur contributors are their own.
In my last article, I discussed The Investing Mindset. This is the third and final article in this series. Entrepreneurs make the horrible mistake of leading with price and tying all of their proposition conversations around this perspective.
When you are attached to competing on price, you will never be able to weather the long-term journey as an entrepreneur. You will be on a fast path to competition with those who can always undercut your price. Guess what? According to Business Insider's Steven John, volume players like Walmart will always be able to keep their prices lower through "sophisticated and largely automated supply-chain management systems, by keeping in-store design basic, by having executives use budget travel options and, until recently, by paying hourly employees less than competitors." They will always win.
Forbes contributor John Mariotti wrote that it all comes back to your value proposition. The best conversations happen when you are aligned with your vision/mission/purpose, and you never even speak about price.
Think about it. Your obsession with discounts is doomed to attract the wrong customer. According to spellbrand.com, "by being the cheapest or lower priced, you attract the wrong customers. You attract customers who make decisions based on price and not value." If you are leading with price, then you will always attract people with a scarcity mindset. People who are evaluating a decision based on the price will see only the win/lose scenario. In the world of scarcity, someone always has to win and someone has to lose.
Instead, you can choose to create a win/win/win scenario — where the other person wins, you win and the collective consciousness wins. There is a conversation that happens when you align with creating value. In even the most competitive industries, there is always room for the best.
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I only make an offer when I know we are aligned in our values, morals, ethics, goals and vision. Otherwise, if you don't have these commonalities from the very beginning, you will never be able to bring a project to fruition. It will be doomed from the start. You risk your reputation in the marketplace because you attract people who will never be able to cross the finish line of success with you.
At the beginning of your career, you believe you need to compete on price because everyone else is. Yet, once you step into the Investing Mindset and are no longer talking about costs or expenses, but an investment that creates exponential value, then the whole world of price flies out the window. According to Blake Morgan of Forbes.com, "Companies with a customer experience mindset drive revenue four to eight percent higher" than companies that are more focused on pricing because they know that the best experiences most often rely on value, not on prices.
How much would you invest in having more time or freedom? How much would you invest in having this project taken off your plate?
These are the conversations that happen when you are competing on value.
Every industry can be evolved through the value conversation. Ask yourself, How can I do it faster, easier and with the least amount of resistance? How can I save people the most valuable assets in life?
According to cfoperspective.com, "People care most about how their life will be better."
When you create value in your industry, you share your golden secrets that you have spent years cultivating and perfecting. You are taking them straight to the finish line of success. There is no need for them to figure it out themselves. You are helping them avoid the countless mistakes and frustrations of figuring it out on their own.
Related: Value proposition: What It Is and How to Elaborate It
When you compete on value, you will attract the highest level of conversation from others who value your authority position. Everyone ready to go to the highest level understands that you want to avoid the word cheap. Nothing of value is ever given at low or discounted prices. When it comes to business advice, you never want to take cheap. There is nothing more expensive than cheap business advice. Cheap business advice will cost you the most amount of money. You will make costly mistakes that will ultimately drain your energy, your bank account and your enthusiasm for building your business.
Always have a VIP up-sell in every offer you create, there are always consumers (like me) who invest in that upper echelon of creation. Including that high ticket, premium offer to your products and services is a quick way to add even more revenue to your business streams.
When you are playing the long-term game as an entrepreneur, you want the best. You want to invest in the partnerships that will take you straight to the top with the least amount of time/energy/effort.
When you are ready to play the game of creating value, you will look into your industry and you will see no competition; there are very few who ever get out of the hustle mentality when they compete on price. You will see a vast open landscape where value is the ruler of the land.
The moment you decide to play the value game, you will attract those ready to invest at the level of service or product you can deliver. Also, you are attracting a higher level of conversation with those who will appreciate you. The value conversation goes both ways — when you align with and offer the highest value in your industry, you attract and receive those who value you the highest. Now you are in an infinite creation spiral. The only question that remains is how many zeroes do you want to add to your bank account?
