A few months ago a friend of mine pulled me to the side when I had this fire sale on design
. I was determined to roll out a promo each month for design offerings and the schedule I put together was dizzying. She saw one of the first promos on Instagram and called me, immediately (it is a blessing to have entrepreneurial-minded friends..and as you read this know that hindsight is also 20-20).
The conversation About a Value Brand Went Something Like this:
Her: Uh, I saw this ad you put up on Instagram for web design. What is that about?
Me: Oh I need to make some samples of my work because the sites I designed before are all down or obsolete.
Her: Soooo, how many of these are you planning to sell because I know there is a limited number, right?
Me: Of course there is (although…I really didn’t intend to listen to her, lol).
Her: Good because we really don’t need you out here in the market place with all of what you are capable of doing underselling in the market and way over delivering in your execution.
What Just Happened?
We talked for a few more minutes but when we hung up, I asked myself…”What just happened there?” I knew her advice was solid from a business perspective but I didn’t know what I should do about it.
My Goal With the Firesale
My goal was really just to have some examples to showcase my work without doing anything for free (a dilemma you may also face) but I knew there had to be something wrong with my model because she was concerned enough to call me about it. She and I are in the same niche so she knew the value of what I was offering in that fire sale; I appreciated the call.
After thinking about it for a few days, and being frustrated by the influx of orders from that fire sale, I slapped my forehead. The lightbulb had finally come on.
Value vs. Price
In that call she was basically saying that in the market, your cost structure is based on cost or on value. In a roundabout-slightly-bullying-but-well-meaning-way…my friend was asking me:
Do you really want to be the Walmart of design or would you prefer to be Neiman Marcus?
Her call helped change my entire business model. It forced me to think about the products and services my company offers and the type of clientele I want to engage in my brand. I’m going to send a text right now to thank her for that.
But what about you? Have you thought about your cost structure and how that aligns with your client segments?
Value vs. Cost –
A Mindset Challenge
Your mindset has a lot to do with how you price your products and services. At the outset of a business, most of us think more like a business owners and less like an entrepreneurs. We are fearful that no one will purchase products and services from us if they had to pay a higher price for our offerings. That is why our pricing strategy is based on cost rather than value. And we haven’t done the market research to support a value driven cost structure. Let me ask you a few questions:
- Have you tested your prices in the market?
- Added more perceived value?
- Are you marketing your products and services?
Sometimes a cost-based business model is the
easy lazy way when pricing products and services. If you are taking a throw-it-all-against-the-wall (mass market) approach to building your business and not a niched down targeted market approach with research, cost will be your default because you don’t really know who you are marketing to or what they really want or need.
But if you have done the work of your brand, you will develop a cost structure based on value and answering to the needs of your clients’ with products and services cultivated specifically for that market. But your mindset has to change. The best way to do that is to test, market, and test some more. Testing your market leads to greater confidence in what you’re offering. And knowing the value of that offering to the client faced with the problem you solve.
Until the next time, Soulphisticate – you are the answer to a question God asked during your generation. Get out there and lead. teach. connect. inspire. and do all the things necessary to make your vision and mission of your brand come true.