Estimated reading time: 4 minutes

It's Only Common Sense: Don't Lower Price; Raise Value

Editor's Note: To listen to Dan's weekly column, as you've always done in the past, click here. For the written transcript, keep reading...Anyone can lower their prices, but that’s a loser’s game that we in the PCB industry have been playing for years. And look where it's gotten us. Only 250 board shops remain in North America because we've all played the "lower the price" game for years.

First we did it with each other. Then, when customers got wind of Asian prices, we stood by while those shops ate our lunch from 9,000 miles away. That worked out well, didn’t it? And now that a bit of onshoring has begun we are back to beating the pricing drum again. How long will this go on? Are we going to stick to this economic theory of de-evolution until none of us are left? Or are we going to do something about it?

I was inspired by something I read in Seth Godin’s Watcha Gonna Do with That Duck? The great book is a collection of Godin’s blogs and articles. I’d strongly recommend that you find it on Amazon and read it.

A section he calls "The Intangibles" really applies to the PCB industry. I love this section because it recommends ways to to get away from selling price and to selling value. Here is an excerpt from that section:

Let’s say your service costs more than the commodity-oriented competition (I hope it does!). Where do you find repeat business or even new business? How do you make a sale (to another business or to a consumer) when you cost more?

The answer of course is in the intangible. The things that have no price. The things that customers value more than it costs you to provide them.

If you don’t have that, all you can do is beg. And begging is not a scalable strategy.

If you find yourself saying, “the boss won’t let me lower the price,” or “we’re more expensive, but that’s because our cost structure is higher.” then you’re selling the intangibles too short. The stuff that people can’t buy at any price from anyone else, but that they really value.

Here are some random ways you can embrace some intangibles:

Call the person before you get the RFP, before they know they need you. Brainstorm with them about how you can work together to create what they need. Participation is priceless.

You’d be amazed by how much people value enthusiasm. Genuine transparent enthusiasm about the project they’re working on.

Don’t forget speed. If you are overwhelmingly faster than the alternatives, what’s that worth? For some people more than you can imagine.

Focus and personal service are obvious (but priceless) intangibles.

Generosity is remembered for a long time. People remember what you did for them when you didn’t have to do a thing, when you weren’t looking for new business, when it was expensive or costly for you to do it.

How do you respond when you make an error? This is actually a huge opportunity to deliver an intangible, especially in a business-to business setting.

Peer pressure is another silent intangible. What will my friends and colleagues say if I choose you? What if I don’t choose you? Is it fashionable to pay a lot? How hard are you working at establishing a connection across your market so that choosing you is the right thing to do regardless of price?

The last one is probably the biggest. Hope. Do you offer hope for something really big in the future?...What does it look like? Are you drawing a vivid picture?

Pretty sound advice, isn’t it? What I found amazing is that it could have been written with our industry in mind--especially the part about speed. Do you have things you can do that others cannot that will bring value to your customers? Do you have your own intangibles? No? Well here are a couple for you to consider:

Make sure your quote gets there faster than your competitors. This is extremely valuable, especially to those buying your time. Getting the quote to them faster is the first time-sensitive service you can offer. It exemplifies that fact that you are in the speed business.

Contact your customer after you ship that first order just to let her know that you care enough to follow up and to check that everything was okay. The higher up you are in the company, the more effective this is.

Do something that no one else does; something that will make you stand out. Put a wise quote in the side of your boxes, send your board in bright red or bright green boxes. Give your customers something special each year during the holiday, something that pertains to your business that they will find useful enough to use every single day (and, no, I don’t mean a coffee cup). Give it some thought and you’ll think of something…it’s good for you to think like this.

Finally, I’ll leave you with one last thought from Godin: Your product becomes a commodity when you make it a commodity. It’s only common sense.