Why Compete On Value Vs Price?

Many visionary companies compete on value rather than competing on price. It is very important to compete on value because this is the main characteristic of having a successful business. There are a lot of ways to create value in your business. It can come from tangible factors like when the customer gets financial returns from your product, service, image or brand equity. The fundamentals of the business should always be the same. Sell value and never compete on price. Here’s why it’s good to compete on value vs price.

Competing on price has its own perks. Price changes can occur directly or indirectly through discounts, temporary sales, rebates and other tactics. The advantages of price competition can have a huge benefit if you have huge resources to expand your strategy. If you can purchase your products in bulk, then you’re saving on purchasing cost can be relayed to your customers. The biggest disadvantage is that if you pursue this strategy then your business is associated with it at all times. All of your product’s cost should be kept minimal to maintain your business success and any elevation in the prices of low cost products may harm your business. Many of the high end retailers have taken this bull by the horns and changed this strategy into high profits. You will always be under scrutiny by your competitor if you label yourself as “the cheapest seller”. Customers always look for a high end service and this may harm your budget and profits.

Competing on value means having a better made product. You can add value to your product from making high quality content for the product’s description, logo and support center. Through the product you are selling trust and reassurance can be a major bedrock in attracting and maintaining your customer base.

If you promise your customers refunds more than the original cost of the product or very flexible return policies, the advantage of reassuring the customer will always come with a variable amount of risk as some customers can never be reassured.

The best way to compete with those major retailers would be to provide them with a head to head competition and just go for it, only and only if you are blessed with resources. If not, the choice is clear for you and that is to compete on value. Make a “value promise” and this will reflect on everything your company does. Check on your customers more often and check if they are getting what they are promised. If not, fix it. Also be keen about recording information and identifying opportunities when they come your way so you can discuss them with your customers. Attend seminars and events where your competitors or customers are speaking. Read research articles on challenging issues. Yes, this can be a lot of work but the payoff is going to be huge and fruitful.