Sent by Jonathan Stark on May 13th, 2019
Reader David Head wrote in with a great example of racing to the top by appealing to a very specific type of buyer with something unique - but seemingly unrelated to the core value proposition (shared with permission, lightly edited for clarity):
Hey Jonathan, Loving your regular emails. Like many others, I am totally on board with value pricing vs billing for time. Saw this example over the weekend that I thought would interest you: How much would you pay for a toaster? A quick check on prices for a toaster shows prices between $29 and $99 for pretty standard 2 slice toasters. The basic function of a toaster is to heat and brown bread products. So how could anyone charge, and why would anyone pay, more than that for a device delivers just that outcome? The “more fancy” toasters have features such as: * Selections for different products such as crumpets and fruit bread * Lift & Look mechanism – check progress without stopping the current cycle * A Bit More button for added toasting time * Intelligent one-touch automatic lowering function * LED progress indicator But all these features are included in a toaster that sells for $129. Smeg toasters carry a higher price for their name. A standard Smeg 2 slot toaster is $179. It comes in different colours. But not a lot of the above fancy features. The top of the Smeg line is a toaster that combines the Smeg name with Dolce & Gabbana. Still only two slots. It does feature 6 variable browning levels. It is multi-functional with a reheat program for warming up cold bread slices; a defrost program for thawing frozen bread; and a bagel function for single-sided toasting. Finally, it has anti-slip feet and a removable crumb tray. But that is it – no Lift & Look, no Bit More, no auto lowering. What does this toaster have for the price? It has “Covetable Italian Design”: ”Taking art and design to a new boundary, the Smeg Dolce & Gabbana 2 Slice Toaster features lavish decorations of gold lemons, prickly pears, and red cherries that are framed in crocchi. Floral motifs are also noticeable, harking back to the beautiful coasts and landscapes of Southern Italy.“ It is “The Innovation of Toasting”: ”The Smeg Dolce & Gabbana Sicily Is My Love Toaster has a powder-coated steel body and a stainless-steel ball lever knob, giving it added toughness to take on regular use. In addition, it has extra wide slots and self-centering racks for even browning on both sides of the bread.“ And how much do you pay for all this? Just $799. That’s right. Over 4X the price for a ’standard’ Smeg toaster. And over 6X the price for a toaster with many more features. The desired result of the owner is clearly not just warm brown bread. They are prepared to pay much more for the experience.
Yup, eight hundred bucks for a toaster that probably doesn’t make toast any better than a $15.88 Hamilton Beach from Walmart.
But people who buy a Smeg Dolce & Gabbana Sicily Is My Love Toaster don’t care about toast. They care about Sicily or art or design or color or nostalgia or maybe even “covetablity.” They want to walk into their kitchen each morning greeted by something that makes them feel good just to look at.
They want the special one.
If you’re used to thinking that “toasters are for making toast and the cheapest one will do” then you shouldn’t be surprised when you encounter clients who think “web developers are for making web sites and the cheapest one will do.”
The solution is to recognize that trying to convince a “cheapest will do” person to buy “the special one” is a waste of time. It’s much more effective to attract people who already value what the special one has to offer.