Startups don’t need to lower their prices in order to stand out from competitors.
Registering a business, choosing a few products and creating a website so that you can start selling sounds easy enough but actually running a profitable business is anything but.
A business consists of several complex systems that need to work in unison in order for your idea to thrive. This means that if one of these systems falls short, the entire business could fail. Pricing is an important aspect of any business and when you’re making adjustments in order to grow your startup, it’s best to leave your pricing until last.
Many entrepreneurs make the mistake of competing on price in order to get ahead, but this can end up causing more damage than anything else. It’s easy to assume that the business with the lowest prices will get the most business but this is only partially true.
A unique selling proposition needs to be strategic and lowering your prices is not exactly an innovative move. There will always be another brand or business that can undercut you. In fact, when too many businesses start lowering their prices, it’s a sure-fire way to completely ruin an industry. Customers certainly find low prices appealing but this shouldn’t be the only reason why customers choose to buy from you.
Owning and running a business is no longer about taking a good guess about what would make customers want to buy from you. It’s about shaping your offering around the specific needs and pain points of your customers. Your customers want to help you make better decisions and solve their problems, not provide them with the lowest price and send them on their way.
Creating a USP means understanding how your product can help your customers combat the problems they sit and worry about when they go to bed at night.
There are times when pricing is the best USP for a business. If you feel that offering lower prices is the right direction for your startup, ask yourself these questions:
To determine whether using pricing as your USP is the right approach, decide how important price is to your customer. Do they value price above all else or are there other benefits that would sway them to purchase from you. For example, if you are selling to someone in corporate who has a strict budget to adhere to, price might be much higher up on their list than other benefits.
Before you decide that lowering your prices is the best approach, you need to be able to prove that your prices are significantly lower than your competitors. If you want to compete based on price, make sure that you’re able to help customers save a lot more money than other businesses who offer the same products and services.
When you’re desperate to start making sales and see some movement, it can be easy to jump to the conclusion that lowering your price is the best course of action. Here are a few other USPs that you could use to grow your startup.
A quality experience or high-quality product can be enough to drive customers to buy from you instead of your competitors. Find ways to improve the quality of your product or service as a way to stand out. Turn to your customer research to decide if your target audience would be willing to spend more for better quality and turn that into your USP.
How can your products or services make your customers’ lives easier? Sometimes, all you need to do to stand out is to showcase why your offering is more beneficial than what your competitors have to offer. Focusing on understanding your customers’ needs and problems can be a highly-effective USP if it’s done in a genuine and relatable way.
Offering convenient, fast or unparalleled service is another way that you can differentiate your startup. Are there ways that you can add more value in terms of service alone? A good experience is very high up on the list for many consumers, so use this to your advantage.
In order to grow your startup, sometimes you need to tap into segments that aren’t currently being serviced. Once you’ve identified a niche that your startup could service, find ways to connect with them in a real and meaningful way that will grab their attention.
Perhaps your business is already making sales but not enough to get you to the next level – this is where innovation comes in handy as a USP. Look into the possibility of creating new products and services in order to stand out from your competitors. Is there something that new or different that you could offer that your competitors aren’t? There’s even the option of optimising your processes in order to provide faster delivery or better-quality products.
So many entrepreneurs immediately jump to lower pricing when they could actually go in the complete opposite direction. Premium pricing does actually appeal to some target audiences because it shows that a product is the best of the best. If all off your competitors are offering lower pricing, consider moving in the opposite direction and creating a premium offering that stands out.
Whether you’re a startup or an established business, there are a number of different ways that you can compete in your industry. There is also nothing stopping you from having more than one USP, provided you’re delivering on all of them. Simply selling a product or service is no longer enough to thrive in the competitive world of business, so be sure to give your USP thorough thought for the best results.