It’s simply a must to understand the difference between a value proposition (and the components that determine a value proposition), versus simple pricing. You really are behind the game if you really don’t know the difference here.
Competing on price is a bad strategy because it’s always a race to the bottom.
Most people who struggle with pricing, don’t understand a value proposition. Value proposition isn’t about, ‘how much do I charge?’
Value simply, is not determined by the problem alone.
Value is about how much you understand the cost and impact of your customers problems, and what the values in your market are, and what’s important to them. When you’re across this the easier it is for you to price and position.
Value is determined by:
1. What is the cost of the customer/client problem?
2. What are the flow on impacts and costs the problem creates?
3. What are the benefits of solving and alleviating the problem?
4. Understanding what the market values the solving of that problem. Your *sales matrix is useful here.
When you add all of these up, you understand the value of the solution and now you have a value proposition.
To me, pricing should always come last. It’s always about positioning, when you’ve got a strong position and a strong value proposition that is linked to a strong brand, in most cases pricing is irrelevant.
I’ll say it again, in most cases pricing is irrelevant. Pricing only becomes relevant when there’s not a strong value proposition.
How do you create a strong value proposition?
Okay, if you can solve someone’s problem and the cost of the solution is in line with the value of the problem, it’s not about price, it’s about value. If those two numbers align it’s a no brainer.
The challenge is communicating that in a way that people actually believe you. How do you do that? You build a brand.
How do you build a brand? You build a brand by building market trust.
How do you build market trust? You build brand equity.
You build market trust by providing utility information on a regular basis on social media that is genuinely helpful, without people transacting with you. This is the process of building brand equity.
One of the reasons we’re experiencing the level of success that we are is that we just give so much away, so much away for free.
In 99.9 per cent of cases when people come to us they trust that the value is there because we’ve built that trust thru brand equity.
This is a lesson in social media when it comes to value proposition.
The value proposition isn’t built in selling, it isn’t built in marketing.
The value proposition today is built in your social media profile, it’s built in you social media presence.
If you can’t demonstrate value thru your social media presence, then people will question value (I also use a sales matrix to demonstrate value, and the sales matrix is also a really valuable marketing tool).
To me, build brand equity thru the publication of utility content on social media platforms to thereby; build that inherent trust, demonstrate your understanding of the problems of the market, demonstrate your understanding of the cost of those problems, and your understanding of the surrounding impacts on the individuals that own those problems.
As a result of all that, you create high levels of understanding as well as high levels of trust and connection, then…
The next step is having the right promotion going, use your *sales matrix, at the right time to drop in the right sequence, then snap, they end up transacting with you and becoming a client.
*Sales matrix: is a graph or chart that compares your product or service to your competitor(s). A competitive matrix is an analysis tool that helps you establish your competitive advantage. It provides an easy-to-read portrait of your competitive landscape and your position in the marketplace.