How a Higher Price Makes You More Competitive

John Ray: [00:00:00] And hello again. I’m John Ray on the Price and Value Journey. How does a higher price make you more competitive? I was with the services provider the other day who I’ve had multiple visits with to talk about his pricing. “I raise my prices again,” he said. He went on to talk about the benefits he’d received from that move, including weeding out clients who aren’t a great fit. He also said it’s made me more competitive. Well, that comment raised my eyebrows as most entrepreneurs think higher prices make you less competitive, not more.

John Ray: [00:00:42] “How is higher pricing made you more competitive?” I asked him. “Well, it’s gotten me into larger companies,” he said. “The larger corporate clients I want to do business with see me as a serious player. They look at me and see me as a real company, which is what I am.”

John Ray: [00:01:01] If you’re a small business or solopreneur trying to break into the corporate market, pricing as a marketing signal becomes very important. The rationale keeping your price low because it’s easier for a corporate buyer to hire you is flat out wrong. Buyers inside corporations are invariably risk-averse. They fear missing the deliverable date on the project they’re working on. They fear the project getting screwed up by the vendor they hire, thereby incurring the wrath of not only their boss but the boss’s boss who comes down on both of them. Beyond looking incompetent, a bad decision could cost them a promotion or even their job.

John Ray: [00:01:45] This is one place where consultants, speakers, and other professional services providers get mixed up on what constitutes value. You’re so used to getting beat up by nickel-squeezing small business buyers that by the time you break into the corporate space, you don’t understand what’s valued. For a corporate buyer, there’s value in reliability in knowing the project will not just get done but will be done as agreed upon and completed on time.

John Ray: [00:02:17] Value comes in knowing a vendor has the resources to get and keep the project on track. There’s value in experience and reputation and consistency, evidenced in other corporate engagements successfully completed. By the way, it’s true for your best-fit clients among small businesses, too. The best ones, the ones you want to do business with don’t have time to penny-pinch. They’ve got big goals and they need vendors who can deliver. I’m not suggesting that price is unimportant. Price is always a consideration. Price, though, is just one factor as a risk-averse corporate buyer also weighs reliability, resources, experience, consistency, and reputation. It’s all these characteristics which make you competitive in the corporate market.

John Ray: [00:03:12] I’m John Ray on the Price and Value Journey. If you’d like to connect with me, go to johnray.co, or email me, john@johnray.co. Thanks for joining me.