One of the best things about owning a business or directing the path of a company, is that you have the freedom to adapt and improve as things change. With this in mind, I’d like to share an idea, (more of an opportunity really) with you. Something you may not have considered before.
It’s all about where you should set your prices or fees, and which segment of the market you should serve.
High priced, medium priced or low priced?
High priced, quality brands are doing really well.
Low priced, budget brands are doing really well, too.
The average priced, average brands are struggling.
And that’s been the case for well over a decade now!
Yes, those are general observations. But the core message is loud and clear. It’s extremely hard to sell an average priced, average positioned product or service. Average prices (or fees) are too expensive for those who are struggling financially. Average positioned products are of zero interest to those who demand great quality products or an outstanding service.
Hold that thought.
The vast majority of small and medium-sized businesses set their prices pretty similarly. By default, this means they set them within the average range. The majority of vendors selling with a similar price range is what creates the average price.
Are your prices or fees pitched correctly?
If you’re in that highly competitive, hard to get noticed middle ground, and you’re finding it hard to thrive, I’d like you to consider leaving it.
I’d like you to consider elevating your pricing or fee structure so you’re firmly in that high price / high quality range.
Or to consider opting for the opportunities that come from being a successful, budget provider.
By the way, there are huge opportunities at the budget end of things, if you get the balance right.
Poundland, the best known budget retailer in the UK, generated revenues of £1.3Billion when it’s last figures were announced. Similarly, service providers who are able to put robust, highly optimized systems in place, can very successful whilst charging significantly lower fees for their services. I’ve seen this low-fee model work extremely effectively, many, many times.
So, should every mid range small and medium-sized business reposition away from the middle ground?
No. Not at all!
Did you intentionally chose where to set your pricing / services?
Over the past 25 years serving business owners in over 40 countries, I’ve found that business owners tend to naturally gravitate toward the middle ground and average pricing. Very few of them intentionally set out to be there. It just happens. The reasons are many and varied.
My suggestion is that it’s a good idea to consider your options. All of them. Is the segment of the market you find yourself serving today, taking you where you want to be in the next 5 or 10 years?
If it is, then you’ve landed in the right place.
If not, then examine the opportunities open to you, serving one of the other segments.
Maybe the key takeaway here is to make sure you intentionally choose where you set your prices or services. Many people ‘happen upon’ the right segment, others happen to get it wrong. We need to be smarter than that and deliberately decide for ourselves.