There comes a time that you must decide what your product or service is worth. Standstone was the waste collection company my husband and I started after my accident, in the early 1990s. We started with exactly one truck and zero paying customers.
Soon after, when Standstone was a young budding business, we lacked the confidence to monetize the services we offered according to their true value. We wanted first to be liked, then to be valued, based upon others’ appreciation. Unfortunately, this has the opposite affect than we desire. People will tend to place a lower value on your services than you do. So if you start by undervaluing yourself, things will only get worse. There is a fine line between cost-effective for the customer and cost-prohibitive for the business.
One hard lesson we learned in business related to this concept. Eager to increase income, we reduced service rates to gain more customers. The result of this was threefold:
- Customers undervalued the service they received and were even reluctant to pay the lower price.
- Instead of increasing income, these low-priced customers ended up costing the company more money that was earned.
- The customers that paid a fair price for their service did not always receive the level of service they paid for and deserved, because we had a high number of low-cost customers to serve at less than our cost.
Trying to serve customers that undervalue your service is counter-productive to everyone involved. As a result, our company developed a firm and fair price structure, aimed at optimal service for fair prices, with a built-in profit margin.
If you are in business, first make sure you understand your clients’ needs. If you don’t have a clear idea about the value you offer to your potential customer, they won’t either. Find that niche market and be the best in the world at your craft. Make sure people know your unique advantage or benefit. However, it is imperative that you price your product or service in accordance with the current market. Make sure to factor all cost into your budget. Then over deliver on service, but never under-sell your own value.