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Make people an offer so good that they feel stupid to say no.
These are golden words to live by when operating a business to maximise profitability.
And when it comes to profitability, you can do it in either of the two ways:
- Make marginal profits on thousands of successive deals
- Score a significant profit on a handful of deals
This summary will help you move your business ahead by focusing on the latter.
Let's start with:
Commodities vs Value-based Products
How much should your product cost?
Should it cost more or less than what someone else is also offering in the market?
How do you get your customers to pay more?
The answer is how you choose to look at your product.
Is what you are offering a commodity?
This means that there are other similar offerings, and the lowest price product often wins.
Or are you selling something unique in value?
This means that what you're offering is miles ahead of your competitors, and the customer can extract tremendous value from your solution.
If you go the commodity route, that's a surefire way to kill your business.
Pricing wars are usually won by corporations having deep pockets.
Companies keep fighting amongst themselves by lowering their prices, and the customer usually chooses the product with the lowest price since the products are similar.
Imagine buying a toothbrush:
