Sound Ideas . . . Marketing tips from Mark Peterson
What do you have that is scarce?
Nothing drives up the price you can ask, and thus the profit you can make like scarcity. In order to have scarcity, one of a couple things must be true. Either the thing you are selling really is one of just a few remaining of its kind, like a Model A Ford or Van Gogh painting, or it’s perceived to be of a very limited supply, far less than the number of people willing to purchase the product, like pro sports game tickets, rooms in a fancy downtown hotel or property on the coast line.
Since most things we sell don’t have actual scarcity, our job is to place enough demand on the products and services that we do provide to create a perception of scarcity. In other words, by creating lots of interest in, or by refining what you do so that it is a little more unique than your competitor, you can stimulate buying. When the inquiries for your thing start to become greater than your capacity, naturally you will be able to ask more. Without the demand, you will only be able to charge a price that is regulated by the marketplace.
Sometimes you can sell the exact same thing as somebody else, but the way you deliver it, the way you finance it, or some other factor complimenting the item becomes your selling advantage. For instance, maybe you accept credit cards, offer free delivery, offer a guarantee or a free service call afterwards when your competitor doesn’t. Sure, those things cost money, but creating even a slight perception of scarcity from the increased sales activity is virtually priceless. Carrying specialty items not found in the big retail centers, or providing a service un available from every handyman or repair center also puts your business in the unique position of being able to dictate to the customer what the price will be, instead of the other way around.
If you just want to sell big volume on low profit margins like the giant stores, there is no need to develop the perception of scarcity. Chances are, most of you can’t compete evenly on that playing field, so you have to create a reason for the buyer to pay more to get it from you.
Effort made in creating perceived value, that leads to increased interest in your offering ultimately can pay a huge dividend. So, before you are tempted to revisit your pricing scheme to match what a competitor offers, maybe you would be better served to create an advantage when they buy from you and take price out of the equation.
Mark Peterson is available for business performance and creative consultation. Call 724-846-4100. email@example.com. Twitter: @soundideasman.