Sent by Jonathan Stark on August 24th, 2018
Let’s say you and all your neighbors sell firewood at the end of your driveways for $3 per bundle, and that each sale nets each of you $1 of profit per bundle.
Then one day, you decide that $1 of profit per bundle is not worth your time, so you decide to double your price (i.e., from $3 to $6) to quadruple your net profit per bundle (i.e., from $1 to $4).
Pricing psychology being what it is, simply posting a premium price will be enough to attract a subset of buyers for two reasons:
Your ideal buyer exists in the overlap between these two things - i.e., people who don’t see a meaningful difference between $3 and $6, and will then think:
“Well, I might as well buy the best one.”
We could stop there, but there are a couple risks:
So... what could you do to answer the question, “Why is your camp wood worth more?” to the satisfaction of your customers, your neighbors, and maybe even yourself?
You could pull a Don Draper “It’s Toasted” with a sign proclaiming that your camp wood is “organic” or “hypoallergenic” or “gluten free” or whatever. This might be enough attract buyers, but it’s not a genuine differentiator because it’d also be true of your neighbors’ firewood.
No... what you’re looking for here is a difference that will be meaningful to the entire market (i.e., you, your buyers, and your competitors). You want to actually improve the product in a way that will be more valuable to your customers.
And there’s no better place to look than your ideal buyers. Having conversations with customers is the surest way to identify what you could do to add value to their purchase.
Since I don’t have the luxury of talking to potential camp wood customers at the moment, I’ll act as a proxy. As someone who buys a pallet of firewood every winter (for our fireplace, not camping), I can make a some educated guesses about what someone might want when it comes to firewood:
If we add in the camping angle, I’m going to guess the following might be attractive:
You could pick any of these features to emphasize as a guarantee in your marketing (i.e., on your hand painted sign). And of course, having made that promise, you’d want to change your process keep it. For example, if your hand painted sign says, “Don’t want bugs in the back of your car? Our camp wood is guaranteed bug-free.” you’ll want to take steps to ensure that there are no bugs.
But why stop there? Now that I’m thinking about it, you could bundle the camp wood together with paper and jute twine (both good fire starters) and include a paper bag full of dryer lint and shredded cardboard from your recycle bin to create a self-contained camp fire kit at a very low incremental cost.
Now all of the sudden, you have a whole bunch of potential answers to the question “Why is your camp wood worth more?” Heck, you might not even be selling “Camp Wood” anymore... you might be selling “5-Minute Campfire Kits.”
Of course, I’m just spitballing with these ideas. Real camp wood customers might not actually care about any of them.
Fortunately, it’s easy to find out what they do actually care about. How? By engaging in casual conversation. For example, you might ask:
I could go on, but hopefully you get the idea.
If you have a genuine concern for your customer’s well-being, chatting with them has the delightful side effect of revealing new and more valuable ways to be of service.
Before you know it, your competitors won’t be your competitors anymore because what you’re selling will no longer be in the same category.
Which is a great way to justify a premium price.
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