You’ve been asked the question of what you stand for in the eyes of your clients and customers. You may say you have the best service, or a complete product assortment, or perhaps you have 30 years of experience, or developed a product which is unique. 
Many companies state they have a niche or as Terry Slattery of Slattery Sales Groups says, that we all have a “Differentiational Value” a “DV.” Do you know what yours is?
Total Wine & More knows theirs as they have the best and largest selection of wine, spirits and beers. They are committed to having the lowest prices thanks to their buying power. To say it succinctly, Total Wine’s DV is assortment and low prices!
Costco’s mission statement includes “…is to continually provide our members with quality goods and services at the lowest possible prices.” Both retailers take care of their customers with a broad assortment and the lowest prices.
You need to ask yourself the question that if you have the lowest price on everything you sell, how do you stay in business and make a profit? You do not!
What is important is for you to understand your strategy. You need to have enough of the highly identifiable products and services that are competitively priced. These are the “Bell Cow” items – highly identifiable to the customer, these must be priced sharply – maybe at cost. You must then have adequate non-identifiable items within your assortment that are priced at a higher margin to cover the cost of what you are giving away.
Total Wine sells the brands which the public recognizes such as Kendal Jackson wines, JW Blue Scotch at or below cost, but they have house brands of spirits and wines where they make double and triple their cost to offset the Bell Cow items. Costco gives some of their products away and at the same time maintain their low 13% margin. You must understand their financial model: the “Membership Fee” and their purchasing power allows them to sell at these low prices.
The “halo effect” of pricing is key for these retailers and us. Total Wine sells key items at cost and offers a huge selection hoping you buy other items to offset their low margins on key items, Costco sell products at very low price to get the consumer to join and pay their membership fees. What are you offering?
When you started your practice, or opened the doors for your business, you thought it was an easy task to price your goods and services. The truth is the key to who you are and what your “differentiation value” is in the eyes of your customers. A key ingredient of your strategy, whether you are selling products or services is pricing. There is much more to it than using a computer or applying the same profit margin on every element of the offering.
Elanstrategic understands the key ingredients in defining your DV and pricing strategy to help you attract business and succeed. Call Yale at or 952-960-6688 or email yale@elanstrategic.com.