Every business needs to identify something that sets it apart from all other businesses in the same niche. Sameness is a curse in the small business world of online selling.
This principle is called the business USP or “unique selling proposition” by some, and others call it a variety of similar things.
The principle is simple: you should attempt to capitalize on some characteristic or trait in your business that you can be known for — some differentiating aspect that only you can claim. It is an effort to set your business apart from all your competitors and then brand your business with that unique characteristic.
It seems in almost every industry niche there is at least one business that desires to claim it has the lowest prices.
This business often brands itself with the slogan, “we will not be undersold.”
To me, that is exactly the wrong message that a solo business ought to extend. Why?
My feeling is that solo businesses will almost always have difficulty trying to compete on the basis of product pricing. Whether the competition comes from large box stores in the USA that have massive buying power . . . or . . . the competition comes from a region of the globe where educated people work for a few dollars a day, it is going to be very difficult to run a profitable business that can compete on price alone.
Playing the game of cutthroat (where profits are cut over and over again and margins are razor thin) is for large, well capitalized businesses that can compete in the “stack ’em high and stack ’em deep” competition. It’s extremely tough for a one person business to compete in that game and come out financially sound.
It is for companies that have competitive advantages in distribution, warehousing, shipping, and marketing. It is also for businesses that don’t have high human labor costs to deal with.
I should think a solo business owner might want to try an almost opposite approach!
I believe you have the ability to create very unique and customized products that command high prices because they are loaded with value, represent a unique and one-of-a-kind perspective, and because you can gear these products to the specific needs of the customer.
When you compete in custom goods, you generally don’t have to sell large volumes in order to be profitable.
Stop getting involved in the price cut wars . . . it’s a risky move and one that you really can’t win. There will always be the new business on the block that wants the reputation of being the low baller in the industry. Some businesses have been know to lose money in an effort to claim that crown even though the distinction will not last forever.
Claiming that your business has the lowest prices in town is easy; but standing behind that claim may not be so fun.
Any other business that decides it wants the low price crown can come along and join the battle.
Every time a price cut happens, your business is diminished bit by bit.
Why do so many businesses try to lay claim to the “low price” title?
Seth Godin claims it’s because “Cheap is one of the only remarkable items that never seems to run out of appeal. For just about any repeatedly purchased item, all other things being equal, the cheap one will gain market share.” (From Godin’s Purple Cow, p. 106)
A solo business should be built around some proposition that is an inherent advantage for the business.
That advantage will almost never include low pricing.
One person businesses are good at customizing, specializing, consulting, creating, sharing, and giving.
These are all things (traits) that are good candidates for the USP of the business.
On the other hand, low pricing is probably only possible in cases where the solo business owner carries a unique or custom product.
But in that instance, why would an owner set a rock-bottom price when there is no competition for the same unique product?
That seems counter-productive to me.
I would, instead, set a high price that could easily be justified because of the special unique nature of the product and its limited availability. . . and of course, it’s easily recognized value in the niche.
To your online business success!