Every business needs to identify something that sets it apart from all other businesses in the same niche.
This principle is called the USP or "unique selling proposition" by some, and others call it a variety of similar things. The principle is simple: you should attempt to capitalize on some characteristic or trait in your business that you can be known for -- some differentiating aspect that only you can claim.
It seems in almost every industry niche there is at least one business that desires to claim it has the lowest prices. It often brands itself with the slogan, "we will not be undersold."
To me, that is exactly the wrong message that a solo business ought to extend. My feeling is that solo businesses will almost always have difficulty trying to compete on the basis of product pricing.
Playing the game of cutthroat is for large, well capitalized businesses that can compete in the "stack 'em high and stack 'em deep" competition. It is for companies that have competitive advantages in distribution, warehousing, shipping, and marketing.
I should think a solo business owner might want to try an almost opposite approach! I believe you have the ability to create very unique and customized products that command high prices. When you compete in custom goods, you generally don't have to sell large volumes in order to be profitable.
Getting involved in the price cut wars is a risky move. Claiming that your business has the lowest prices in town is easy; but standing behind that claim may not be so fun. Any other business that decides it wants the low price crown can come along and join the battle. Every time a price cut happens, your business is diminished bit by bit.
Why do so many businesses try to lay claim to the "low price" title? Seth Godin claims it's because "Cheap is one of the only remarkable items that never seems to run out of appeal. For just about any repeatedly purchased item, all other things being equal, the cheap one will gain market share." (From Purple Cow, p. 106)
A solo business should be built around some proposition that is an inherent advantage for the business. That advantage will almost never include low pricing. One person businesses are good at customizing, specializing, consulting, creating, sharing, and giving. These are all things (traits) that are good candidates for the USP of the business.
On the other hand, low pricing is probably only possible in cases where the solo business owner carries a unique or custom product. But in that instance, why would an owner set a rock-bottom price when there is no competition for the same unique product? That seems counter-productive to me. I would set a high price that could easily be justified because of the special unique nature of the product and its limited availability.
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Post#177 |
