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 which segment of the market you should serve and how to get your prices or fees right.
High priced, medium priced or low priced?
Long before the current economic turmoil. Before the pandemic. In fact, for decades now, here’s what we have seen.
High priced, quality brands are doing really well.
Low priced, budget brands are doing really well, too.
The average priced, average brands are struggling.
Yes, those are general observations. But the core message is loud and clear. It’s a lot harder to sell an average priced, average positioned product or service. Average prices (or fees) are too expensive for those with limited budgets. Average prices are of no interest whatsoever to those who demand the best possible products or an exclusive, premium service.
Why then, is the middle ground where the great majority of businesses land?
Obviously, most new businesses set their prices where they feel they have the best chance of making sales or attracting clients. In my experience, they’ll start off a little higher or a little lower than whatever the average is. By default, this means most businesses begin life within the average price range. And that’s where most of them will remain, adjusting prices roughly in keeping with their similarly priced competitors.
Are your prices or fees pitched correctly?
If you’re currently serving that highly competitive middle ground, and you’re finding it hard to thrive, I’d like you to consider leaving it. (I wrote this helpful piece about how to leave the middle ground that you may find useful).
I’d like you to think about one of the following alternatives.
- Embracing the opportunities that come from serving the high price, high end of your industry or profession.
- Or embracing 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, a budget retailer in the UK, generated revenues of over $1.5Billion when its most recent figures were announced. Similarly, service providers who are able to put robust, highly optimized systems in place, can make a fortune whilst charging significantly lower fees for their services. I’ve seen this low-fee model work extremely effectively, many, many times.
So, should everyone reading this reposition away from the middle ground?
No. It totally depends on your answer to the following question.
Did you intentionally chose the middle ground?
Over the past 25 years, 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.
In short, make sure you intentionally choose where you set your prices or fees. Determine what part of the market you are most likely to succeed in. Many business owners ‘happen upon’ the right segment, others happen to get it wrong. We need to be smarter than that and deliberately decide for ourselves.
IMPORTANT: If you want to make more sales, boost your profits and grow an amazing business, this will help you!