“Why should I buy from you?” is on every prospect's mind. To answer that question, you need to understand what makes your business different from your competition — in a way that’s meaningful to prospects. These differentiators are components of a successful brand. You may even be able to charge more because of that edge.
Red Block Analysis
The Red Block Analysis is a marketing research hack we created to help our clients take a marketing point of view, which is the ability to see a business through the target audience’s eyes.
1. Find Your Competitors
The first step involves generating a list of close competitors to measure your business against.
Tip: Log out of your Google account or search “Incognito” (an option in the Chrome browser), so the search isn’t biased by Google knowing who you are or your search history. The locations of the businesses may still be related to the location of your IP address, however. Make sure it's within your service area.
2. Create a Competitive Chart
Visit each site and create a competitive chart of what each offers; you may want to use spreadsheet software for this.
3. Perform a Gap Analysis
4. Don't Stop There
If you’ve been keeping current with trends in your market, you may discover opportunities for new services to offer. Add these to the list. Don’t rely on competitors to think of everything. If you can be first at something, or ride the wave of a trend, that may be just what you should focus on to build differentiation into your service offering.
Business Differentiation is Relative
Understanding your prospect and how they view your business in the midst of competition is essential to standing out in a crowded marketplace. A Red Block Analysis can help you find ways to differentiate your services in ways that are meaningful to prospects. If you can communicate these differences clearly, your marketing efforts are going to be more effective. You'll be the business chosen more often and ultimately you’ll earn more, contributing to the long term growth of your business.
When hunting around for business services, people often want to know the price. As a service provider yourself, you know how difficult it can be to price your services, let alone know if you should make them public. There's always the fear of turning people off. Or, you'll reveal too much to the competition. To many people, just like wine, price can be an indicator of quality too. So I can understand why you may be cautious.
Not showing any information about what you charge can scare people off. Publishing some kind of price, that is, being transparent, can help create trust. It can alleviate some of the concerns that someone may have about calling you. At least enough for them to pick up the phone.
Services Packaging Makes Perfect
I haven't always published prices on my website, and I don't publish my hourly rate. As I teach in my services businesses classes, it's a good idea to get away from selling yourself by the hour, because it makes it hard to scale. Here's why you should package your services:
Another Good Reason to Publish Your Prices — Search
According to this Moz Blog article about website mistakes to avoid, "people are searching for pricing information. It’s a huge missed opportunity not to have any content related to pricing, and it annoys prospective customers who would rather know your cost range before giving you a call or submitting a form for follow up."
Instead of Publishing an Hourly Rate, Try These Ideas.
You could publish your prices outright or you could hedge. Something like, "Call me for a free :30 minute consultation, and I'll evaluate your needs and costs." There's no one right way to answer this question — just like everything in marketing, right? Consider what fits with your business model and what you feel is going to resonate with your visitors.
If publishing your prices makes you uncomfortable, you could try one of these or a combination:
Whatever pricing model you choose, tread appropriately, knowing you could alienate some potential customers. That's okay, because not everyone is or should be your customer. If you've made a good case for your services, and priced them competitively, and they're still turned off, then they're not a good customer for you. The same holds true for competition — you don't want to rely on price to get more business.
No matter what you decide to say on your website, the better you know your website visitor — and the more you're in their heads, that is, the more you know their psych — the better you can communicate with them to achieve your objectives.
Let us know how you handle pricing on your website in the comments below.
If you’re a consultant, expert or provide another type of service, you may be wondering if you should reduce your price to acquire new customers. Here's why it’s a bad strategy and what you should be doing instead.
1. Price is Only Part of the Customer Equation
Price isn’t a customer’s first thought. There’s a lot going on in their minds before they get to that question. Although it may seem like price is their first concern, these come before:
Imagining what your prospect is wondering about gives you the opportunity to make the case for your services before getting to the pricing question, “Can I afford it?” It will come up, but the question of price only becomes relevant when they’re considering making the purchase. People will pay if they believe you’re worth it, so use the right language to communicate that you are aware of their need, problem or pain. Then, make your pitch.
2. You’re Going After the Wrong Customers
If your fee is a prospect’s only worry, you may be targeting the wrong market. If the discount is the only reason they hired you, you’ve cheapened yourself and you’ll end up with cheap customers who will always battle for low prices.
3. You Shouldn’t Earn Less than You’re Worth
If you set your price at a certain amount, there should have been a reason for it. If you think you’re worth less, then you should be setting your price lower. Hopefully you’ve done your pricing research before this point — that is, looked into what competitors are charging or at least found out what’s typical for your industry. If you don’t think you’re worth that much, then you should be charging a lower price. If that’s not profitable, then you need to revisit your business model.
5. Price is Only One Aspect of Marketing
Starting with the right product for the right market is where success begins. One way to do that is to avoid selling naked services at an hourly rate. Instead, create a suite of bundled services, a package with a high perceived value so customers feel they’re getting a good deal. Design it to meet a specific customer need with clearly defined benefits, and offer it at a flat and profitable price.
6. Price is Not a Differentiator
When asked this question, “Why should I buy from you?,” your answer shouldn’t be “Because I’ve got the lowest price.” It should be, “I’m the only one that does X” or “I’m faster or better.” Carving out a differentiated space defends you against competition and may allow you to charge a higher price than the norm, rather than a discounted one.
7. Your Problem is Lack of Awareness, Not Price
Setting a low or discounted price is only something you do once people know what you can do for them. It’s not the way to let people know you exist. You can generate awareness and leads through a combination of search engine optimization (SEO) and search marketing, advertising, public relations, content marketing and social media to drive traffic to your website.
8. You’ll Lose the Price War
Trying to compete by offering discounts is a downward spiral, a game of how low can you go. You probably don’t have pockets deep enough to outbid your competition.
9. You Get What You Pay For
It’s difficult to make apples to apples comparisons between service providers, so people use price as one indicator of quality. Setting your price too low or discounted could raise eyebrows.
10. Before Closing the Deal with a Discount, Consider This
There are many ways to get closer to the deal, way before you need to sweeten it with a discount. Consider offering something that doesn’t cost you anything — like a free ebook. Or even a free first :30 phone call — something you may need to do anyway to vet out a prospect. This will give you another opportunity to convince them that you’re the best choice and worth the price.
When a Discount May Make Sense
With so many ways to market yourself, reducing your normal price should be the last on your list. However, there are times when you may want to use discounts:
Related article: Coupons for Business, Pros, Cons, and Tips