pricing

Don’t Change for the Exception

Most people don’t like conflict and make a great effort to avoid uncomfortable situations with people, especially those who are difficult to satisfy. It’s important to learn from these situations and consider their feedback, but you probably should not change your business practices because of them. Actually, if you listen to them you may seriously harm your business. Here are a few examples:

Pricing: There is always going to be someone who thinks that your product or service is priced too high. Most likely this is not that case as most businesses actually underprice their services. This is true in all industries, from software developers to manufacturers. If you do not price your product or services properly, then there will not be enough money to invest back in your business to support operations or make improvements.

Speed: Everything takes time. This can take the form of turnaround time or communications. Today, communications are instant, but it doesn’t mean that a business owner can communicate instantly. If you rush or perform work out of its place, then it can negatively impact the quality or your product or service. An example of this was on the show The Profit regarding a furniture manufacturer that would rush furniture production when a customer was over eager to receive delivery, but then their quality would decline dramatically.

Technology: There is always someone who will resist the implementation of technology, but it doesn’t mean that you shouldn’t move forward if technology will help your business. You may be able to make exceptions, but you should still change.

The bottom line is this does not mean that you should over price your services or perform poorly for your customers, but to be careful not to listen to the wrong people. Sometimes you should put in ear plugs when you hear the squeaky wheel.

Price vs. Value

Understanding the difference between price vs. value will probably save you a lot of headaches, improve your finances, and even your life.

To simplify, price is the dollar cost, while value represents the benefits or worth received.

Price is very easily measured, and is an okay measure to use when purchasing goods and services of relatively low significance. Goods are easier to compare because there are usually less variables to consider. As the purchase becomes more significant then so should the role of value.

Value is much harder to compare because some of the benefits are intangible. An example of a product purchase is a personal vehicle. You may have found two similarly priced vehicles that have many similar features, but the less apparent differences are the resale values, operating costs, and repair costs.

An example of determining the value of services can be made with an investment advisor. A good investment advisor will help you to not only achieve investment returns that are in line with comparative benchmarks, but also minimize the tax impact, allocate resources properly, and make sure that you do not make rash decisions, such as selling when the market bottoms out.

Take a step back and think of decisions that you make only on price. Now, factor in value and compare your experience and results. I am sure that you will be surprised.