Compete On Value, Not On Price

Many times, when I meet with a business owner, they ask “why am I not making any money?” The answer may lie in one of two places, they are discounting products and/or services or not pricing their products/services properly.


We devalue our product or service when we discount. We are telling the marketplace that our product or service is not worth a high price, therefore, it must be inferior quality. Here are some reasons businesses discount:

  1. Fear – We’re afraid that we won’t get the sale because we aren’t the lowest priced or we’ll lose customers if we raise our prices. Is this true for you? Did you know that if you have a 30% margin and you discount by 10% your sales must increase by 50% to keep the same margin? The first time I raised the prices in my business I was petrified that I would never sell another thing. Lo and behold, no one even noticed. I raised my prices every year from then on.
  2. Lack of Confidence in Quality – Are you confident in the high quality of your product/service? Is it the best or one of the best products of its kind around? If you didn’t answer with a rousing “YES!!!” This may be an area you want to put some focus on in your business.
  3. Our own beliefs – Do you, as a consumer, always buy the product with the lowest price or do you pay more for some things because of their quality or added value? If you are pricing your products based on your buying habits or the size of your wallet are you leaving money on the table?

Adding Value

  1. Who are your target markets? What are their pain points?
  2. What are the things that make you different from your competitors? “Our customer service” is not a good answer because everyone says it. How is the experience different with your company? What are the benefits of working with your products and with you?
  3. How are you solving your customer’s problems? Is it a better solution than everyone else? How will their life be better because they do business with you?
  4. Does your quality stand up to a higher price? If not, what do you have to do in this area to improve your quality?


  1. Decide what kind of gross margin you would like to make then price accordingly. Don’t know where to start? Find out the margin in your industry and compare it to your present margin. Is there a difference? Why?
  2. Are you so busy and overwhelmed with work that you can’t keep up? This may be a hint that you are priced too low. The reality is that if your margin is 30% and you increased your prices by 10% you must lose 25% of your customers to affect your margins. With this scenario, you can do less work, make more money and have time to truly work on the things that will take your business to the next level.

What is the one thing you’re going to do today to take action in your business?

By: Jackie Zach

Molly BarnesCompete On Value, Not On Price