Reuben Swartz over at Dollars and Sense: The Pricing Blog reminds me of a very important point about differentiation your business. The more similar your products are to others out there in the marketplace, the more important it is that you offer something distinctive that will draw customers. Swartz cites an article from the Harvard Business School newsletter in which John Quelch writes:
“…even when a raw material has no value added and quality standards are set by law or the industry, there is still plenty of opportunity for differentiation around availability, delivery, shipment quantities, payment terms, and all the other services that accompany the core product.”
In addition to the delivery attributes and payment terms you offer, Swartz goes on to give pricing suggestions: “innovating, bundling, and segmenting” as ways you can stand apart. Bundling is a pricing strategy in which you offer, at an attractive price, a package of multiple items that are likely to be purchased together by certain types of customers. Which types of customers? That’s where segmenting comes in. If you can figure out profiles of the different types of customers who tend to buy from you or businesses like yours, you can start identifying which attributes are going to appeal to which group, and then come up with innovative, attractive pricing for each segment.
Which attributes can you use to differentiate your business from your competitors?