One of the most common complaints expressed by small business owners is low-priced competition.
There seems to be an endless supply of businesses who are willing to beat your price.
Many small business owners believe that customers will always go with the low price.
This is simply not true.
Consumers often pay more money for goods or services.
But they must believe that they are getting something for the additional money.
Consumers often pay more for convenience.
Corner stores are one example.
Many products cost more at the corner store, but the convenience offered makes the savings in time worth the additional money.
Similarly with malls-prices tend to be higher, but a shopper can go to many different stores with ease.
In both instances consumers know that they will like pay a higher price, but the convenience offered is worth the additional cost.
Consumers will often pay more for quality.
If they didn't, we would all be driving Yugos.
After all, a Yugo will do the same job as a Lexus- get us to our destination.
But the Lexus does so with greater comfort and dependability.
You can get a hamburger at McDonald's or Fuddrucker's, but there is a quality and price difference.
In other words, when the quality is perceived to be higher the consumer will often spend more money.
Consumers will often pay more for better or more service.
A restaurant patron is perfectly capable of parking his car, but often will pay more for valet parking.
Similarly, consumers often pay for extended warranties because of the peace of mind offered, ease of repairing or replacing defective products, etc.
In short, consumers will pay more if they perceive that they will receive a greater value.
When a product or service looks the same as the competitor's, consumers will make their decision largely on price.
If you want to charge a higher price then, then you must offer greater value.
And equally important, you must communicate that value to the customer.
It is often said that a business must sell benefits rather than features.
The customer is interested in the benefit that your product or service provides.
He is interested in the value that it brings to him.
When you can effectively communicate that fact, those who offer lower prices are not really competitors.
They are appealing to and serving a different market.
When you are the Lexus or Fuddrucker's of your industry, the Yugos and McDonald's are no longer a concern.