Service vs Price: Who Wins?
Where should a business strategy focus to win clients?
Does better service outweigh a higher price?
Or are most buying decisions ultimately a battle between pricing options?
Most business owners and leaders have wondered this at some point or another; often after having lost a deal to a cheaper competitor. Slashing prices seems like such an easy thing to do to win that contract. But what are the long term consequences?
And, not Or
Service and Price are not two separate business facets competing for attention. They are intricately linked, and always part of the same decision.
Price is – or certainly should be – a reflection of value. The impact it has on the client must be higher than the price the client pays for it; what that impact is can vary widely.
The way the impact varies is through service.
We tend to pay more for a sit-down meal than for a fast food meal, because in the former we can sit while we order and wait, and be served at our table. We do not have to stand in line, wait for our food, find our own table and get back up for each drink refill. That difference is service.
What is your service
Consider everything that goes along with delivering what you do. What level of assistance do you provide, what is the environment, what is the timeliness and response rate, how much hand-holding is offered, what are the extra touches you offer.
What is your “chocolate on the pillow“?
These are all part of the value you provide.
And your value goes into your price.
What matters to clients
In the past few years, business research has shown the growing prevalence of service over product and price.
When considering a purchase, a buyer will think of what they need – the product – how much it costs – the price – and how easy it will be to buy, use, and enjoy – the service.
There was a time when product or price would outweigh service. That is starting to shift. More and more research points to buyers weighing service more than price and product.
Service is price
Your price is determined by your service, not in spite of it.
Embed the service as a key element of everything you do. Then price your value accordingly.
Can you share your value proposition in 2 sentences? Give me a call for a guided workshop.