Why competing on Price may be redundant


It is true most business owners often want to increase their sales.

If you scan most adverts fromt the business consulting market

they tell you that can help you to:


  • “Increase Your Sales”
  • “Become Fully Booked”
  • “Get More Clients Now!”

Such slogans are attractive for the unassuming business owner. It feels like the magic pill, the silver bullet that we all need to solve our problems.
Who wouldn’t want that queue of clients/ that queue of customers? Surely that is the answer or is it?

What’s wrong with that?
Take Starbucks as an example of modern business success. Yes, their strategy is based on footfall, on volume based retail outlet however lessons lie in ‘how they transformed’ the coffee industry.

The ability of Starbucks to charge £3-4 for a cup of coffee is business genius. Considering that pre-Starbucks, we were accustomed to the “vending machine, below a pound, muddy water experience!”

This quadrupling of price was based on a range of factors; Starbucks positioned themselves as a “Home from Home” …the half way place between the office and your own lounge, a place to relax, reflect and converse and of course enjoy a high-end coffee.

The coffee beans, the tables, the mugs, the shop decor, the ambiance and the exceptionally trained polite baristas all served to communicate the perception of high end value. It had become an experience rather than just a coffee. It is in the latter part of that highlighted sentence that as business owners we must take note and seek to implement in our own businesses.

Starbucks refused to compete on price

Unlike many businesses Starbucks did not lead on price but led on value. High end value. Here is another way to illustrate this.If Starbucks were to open their doors to everyone with a 20p coffee – would you like to drink in and work on your lap top or meet a friend for coffee and a catch up…

Probably NOT unless you enjoy an experience of working in a place that resembles New Year Sales and a Friday night in McDonalds!
In there lies the evidence that the customer is paying premium for the well-communicated Starbucks experience and the well-communicated perceived value. So, we now know that slashing fees and competing on price will attract some clients but often the wrong clients more importantly it could go even further in decreasing perceived value of your product.

The key lies in pricing intelligently to profit your business and ensure you work with the correct level of clients. This number will be different for each business to work in the ‘sweet spot. Give the best experience BUT before this ensure your clients have clarity of the VALUE you can offer. Your price will reflect this.

Is it easy to apply the Starbucks principles in your business?

Whilst understanding the above is stage 1, stage 2 is about implementation. The business reality is the existence of barriers to increasing fees, which is a discussion which we visit in in our exclusive report.
Fundamentally the lowering of prices occurs because of a communication failure.

As customers are expecting to pay less than the business wishes to charge.

‘The gap between Customer and Supplier expectations forms the problem and the opportunity.’

Successful entrepreneurs and businesses are highly skilled in communicating perceived value which eliminates the need to be price led.

Public Speaking Academy are giving away just 100 copies of our in-demand report:

“7 Communication Methods that increase your Product Price”

To be added to our waiting list Email us at [email protected]

and type 7 Step Price Report in the subject line. 


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