The blog “Steps to Take Before Purchasing a Digital Press” got some great feedback. I responded to Henry’s comments in the blog about image quality and reliability and made the case that “drift happens”! But I wanted to dive deeper into Dennis Beck’s great comments. In the blog it says, “Your selling price falls within a range between your TCO (total cost operation) and the highest competitive price in your market place.”
Dennis Beck responded: I don’t agree that your price must fall between TCO and the highest competitive price in your market area. I believe that part of the structure of pricing is the value that can be placed upon the product that the customer holds. That is, how much does he value YOUR SERVICE. Your product is only one aspect of that. Some customers want the lowest price and they could care less about your service – that is, they want it now and they don’t care how you do that. These are the worst customers and the ones to avoid. However, your best customers are those customers that value your service, where price is not the main reason they deal with you. These customers will pay more than the “highest competitive price” because they want YOUR SERVICE AND ATTENTION. I believe that examining your main customer bases is as, if not more, important than negotiating the click charge.
Dennis makes some important and valid points about value. I agree that we should focus more on customers who appreciate the value of great service and less on customers who focus just on price. If you have to compete on price alone it becomes a bidding war and everyone loses. I discuss this all the time with printers. But they tell me it’s getting more and more difficult to differentiate certain products based on the value of service.
For example, black and white toner pages are sold mostly as a commodity. Sure you can talk about fast turnaround times, reliable image quality and maybe even offer a web-to-print solution for easy ordering. But when a lot of companies offer those same services, it can still come down to price.
How do you build more value into a product that has become commoditized? That is the $100,000 question. All companies struggle with this issue and different companies have tried different strategies.
A few successful strategies have been demonstrated. One strategy that has been working for the last decade is to offer more services under one roof (i.e. mailing, fulfillment). Another strategy is to make the purchasing experience more convenient to customers by offering a web-to-print solution to offer easier ordering, greater interactivity in production (automated preflight, on screen approval) or automatic billing. Another successful strategy is to change the product. For example, as direct mail campaigns decline due to changing or increasing postal costs some companies are starting to offer cross media marketing. Instead of just offering direct mail alone, some companies are combining direct mail with email marketing, SMS texting, Purls and even the newest technology known as QR codes.
In summary, I agree that we have to build more value into our products. The challenge is how to do that. How do you add value to commoditized products?