In a perfect world, you have the best, most unique product on the market at the highest selling price possible, and your cost to produce it is low enough to leave you with a very healthy profit margin.
Unfortunately, that probably doesn’t describe your reality. In the real world, you have competitors constantly barking at your heels with lower prices, a somewhat similar product, and the same rising costs of production you’re faced with.
You can’t be all things to all people. Some will buy what you have simply on price, some will be willing to pay more for yours because of its higher quality, and your cost of production is always going to be in flux.
All three components of the equation are important when you take your product to market, but which matters most to you? Which does your company promote more than the others? Which one is the most important to your customer?
Let’s briefly look at all three and then come back and answer the question of which matters most.
Price
One major electrical parts wholesaler put it best when they said, “We have no quarrel with those who sell for less; they know what their quality and service are worth.” Are you in a price-driven industry? Probably – who isn’t? But why do surveys show that more people would prefer to buy a Rolex watch over any other type of watch? It’s certainly not because they have the lowest price. It’s the perceived value of the timepiece that influences their buying decision (more on that in a moment).
Cost
Many people confuse cost with price. They’re not the same thing.
While price represents what you pay at the cash register, cost is measured in terms of dollars spent on production. Maintaining equilibrium between the two is always a battle. Ask any CFO, and they’ll tell you that their profit margins could be much higher than they currently are. It comes down to this: can they sell it for more, or can they make it for less?
Sometimes cost is the most important variable in the selling equation because the price can’t be raised without sacrificing sales volume. The price of a Rolex watch can be raised, but probably not the price of a Timex. Timex can improve profitability by reducing their cost of labor and materials. Price may have mattered most when they first rolled out their watch, but its optimal price point has been established, and production costs are now their primary concern.
Value
If both a Rolex and a Timex keep accurate time, why are some people prepared to pay so much more for a Rolex?
Three things set a Rolex apart from the competition:
- Superior workmanship
- The best resale value of any watch
- The prestige of wearing a Rolex
Value is the differentiator to the buyer of a Rolex watch. They could spend $50 on a timepiece that will last them for a year or two and then have to be discarded because it no longer keeps accurate time, but they choose to spend 100x that, or more, because a Rolex is more valuable to them.
Which Matters Most to Your Customer?
This is a much better question than asking which matters most to you. Do you know the answer to that question? Have you ever asked your customer?
Many salespeople walk into a potential customer’s facility prepared to compete on price. That may buy them some customers initially, but that same customer will probably drop them in a heartbeat when someone else with the same product at a lower price comes along. That’s not a sustainable business model.
The customers you keep are the ones that see your price, but they buy your value.
The Value of Korpack
If you’ve done business with Korpack for any appreciable amount of time, then you know we don’t sell on price. Our prices are competitive, but they’re not always the lowest.
We also don’t sell on cost. Our people are our biggest asset – their talent and their integrity are second to none. We could reduce our costs by hiring someone who will do the same work for less, but not be able to do it as well. We don’t believe in cutting corners to cut costs.
We’ve built our business on value. We keep our customers long-term, even though our competitors are constantly knocking at their door. They know that they’ll get more than they paid for when we provide a piece of equipment or a service that we offer.
And we never simply check a box when we are done with a job. We review our business relationships regularly. When we recently examined one client’s account we discovered what equates to a six-figure savings / value to their bottom line. Between in-house service hours provided, freight charge absorptions, and new packaging design implementations, the quantifiable impact on their business is immense.
So if you’re not doing business with us yet, contact us, and we’ll talk about packaging solutions for your business. Take a close look at Korpack, and you’ll soon see why we’re the best value in the packaging industry.
