Most new businesses fail. They typically fail not because they can’t deliver value, but because they can’t capture enough of that value to turn a profit and grow. Capturing value requires a clear value message and an appropriate pricing policy.

Unfortunately, most entrepreneurs do not create a detailed value message and pricing plan. They start with a product (or service, I’ll use the word “product” to refer to either), or even a technology and then they seek customers for the product. Then they try to sell those potential customers on the benefits of the product. Often, this involves a comparison with a better known competitor: “It’s like ACME’s offering, but better, and it’s cheaper.”(Read the rest of this post is over on the Bootstrap Austin Blog.)

2 Comments

  1. Chris H

    Well put R.S. You have captured the nature of many businesses and there is a ripple effect with either approach . . . one positive . . . one status quo (far from potential). Your article did a great job of making a case for focusing on being different. For a while there gasoline was being marketed as different . . . have you noticed their branding efforts have changed lately 🙂

  2. Reuben Swartz

    Thanks for the comment, Chris. The oil companies tried and tried to differentiate their gas (“Chevron with Techron”) but no one cared. It’s not about the value you think you have or that you advertise, it’s about what your customers perceive. And customers figure that gas is gas.

    Where gas stations differentiated themselves was by turning every gas station into a convenience store. At one point you could get gas, and, if you were lucky, the key to a dirty bathroom on the outside of the building. Now, most gas stations have clean, indoor bathrooms because they want you to come into the store and buy something.

    A lot of tech companies are prone to this trap of thinking that the brilliant features they spent so much time engineering are differentiators, while frequently customers don’t even use them.

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