If you’re reading this article, there’s a pretty good chance that you’re an entrepreneur either trying to start or grow your business. All too often business owners fight for market share by racing to the bottom of the pricing scale. I’m here to tell you that is a terrible decision and I’m going to give you three examples of why price doesn’t matter when you offer your customers a better experience than your competitors.
We’re living in one of the greatest eras for entrepreneurship of all time. There are so many companies out there that are completely revolutionizing the world. With technology evolving so rapidly, it’s truly incredible how our lives have changed over the past five to ten years.
Being an entrepreneur is not just about selling a product or service. In order to be successful you have to look at it as creating a solution to a problem. No matter what industry you’re in or what you’re selling, if you’re not solving a problem, then you won’t be in business very long. But the entrepreneurs that are changing the world are the ones that are solving problems we don’t even know we have! Not only are they creating brand new industries, nobody can take their market share because they are competing by offering quality and service rather than low prices. Just because it’s the way it’s always been done, doesn’t mean it can’t be improved…
Uber
It’s no secret that Uber has completely changed the world.
Five years ago if you went out for the evening you had to worry about a taxi cab showing up, using public transportation, having a designated driver, or worse, people drove while intoxicated.
Research has shown that across the country DUI’s and alcohol related car fatalities have decreased as a result of ride sharing apps like Uber and Lyft. (source)
The cost of taking an Uber or Lyft isn’t always the most reasonably priced option, but thousands of people do it everyday. The reason for this is because these companies solved a problem (that many of us didn’t realize we even had) and were able to create a positive experience while solving it.
What you need to understand is Uber isn’t selling you a ride; they’re selling you convenience. The founders of Uber and Lyft identified a pain point. The pain was dealing with public transportation, taxi cab companies, or worse DUI attorneys. They found a remedy for that pain, and that’s why they’re successful.
Apple
As of the third quarter of 2018 Apple owned 39% of the Smartphone Market in the United States. That’s almost as much as Samsung & LG combined (source).
Is the iPhone that much better of a device than a Samsung Galaxy? Of course not, but Apple has rocked the world with the introduction of the iPhone and they continue to attract new and keep old users everyday because they’re providing the best experience.
Even before the release of the iPhone, you could ask any geeky computer guy and he’d give you a list of reasons why Apple Computers were not as good as an equally priced PC. Not to mention, you could buy an equally powerful PC for about 50–60% of the cost of a Mac.
The cost of the new iPhone has skyrocketed and Apple has again proven that by offering a better customer experience through their stores, website, iTunes, and App Store, people are more than happy paying over $1,000 to own the latest and greatest iPhone.
Harley Davidson
Unless you live in a cave, you know what a Harley Davidson is. It’s an American Icon.
Harley Davidson manufactures heavy weight V-Twin motorcycles. If you’re familiar with the Motorcycle Industry you probably are aware that Harley Davidson owns it.
Over the past ten years the motorcycle industry has been on the decline, and Harley Davidson has felt it’s share of the pain. Interestingly enough however, Harley’s market share has somewhat increased over that time. As of the fourth quarter results of 2018, Harley Davidson owns 49.7% of the 601cc and up market in the United States. Half of the heavy motorcycles sold in this country are Harleys. (source)
In addition, if you know anything about the motorcycle industry, you know that Harleys aren’t cheap. In fact, similar to Apple, if you’re looking to buy a motorcycle there are less expensive options than a Harley Davidson. The argument could be made that many of those options are of an equal or even superior quality.
Why Harley?
So why do so many people buy Harley Davidson Motorcycles? Because of the experience. For Harley Davidson it’s not about fancy retail stores like it is for Apple, however some Harley Dealers are absolutely beautiful. What Harley has been able to create is a network of dealers unlike any other brand in existence.
If you ride a Harley Davidson, chances are you’re up for a long distance ride. Their touring bikes are like recliners with wheels, so riding down the highway for 300 miles is no big deal, but what happens if something goes wrong? If you ride a Harley, and you’re near a metropolitan area, chances are you’re never more than 30 minutes away from a dealer and service center. Not only that, if you’re a HOG member (Harley Owners Group), and you break down that Harley shop will come pick you and your bike up to get you back on the road.
And besides all of that, Harley Davidson has created a brand identity like no one else. When was the last time you saw someone with a Honda logo across their chest?
For Harley Davidson’s customers the experience is the lifestyle.
Conclusion
So how do you take this knowledge and apply it to your business?
What are you doing better than your competition? When you pick up a new customer or client, why did they come to see you? What made them leave your competitor?
Understand what makes your business different, and then quadruple down on that! You don’t need to have the lowest price in the industry to take market share from your competitors. What you need is to offer a better experience. Whether that experience is through the product or your service, focus on increasing the perceived value rather than discounting your price.
Whatever your product or service is… are you better than your competitor? I’m sure your answer is yes… my response is… then why are you not priced that way?
