Never Sell a Commodity

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Fruits-1489802_1920When you sell a product that the customer perceives as a commodity, you can only compete on price.  A small business owner always loses a price war to the “big boys” who have the ability to buy products in bulk and have cost savings as a result of economies of scale.

So if you can’t beat them on their field, don’t play there!  Change the rules and the game and play on a field where they can’t compete.  You accomplish this by adding value to your commodity product in a way that the “big boys” can’t or won’t match.

When I started my CPA firm, I faced this same problem.  The tax factories like H & R Block had a marketing budget I couldn’t compete with.  The larger CPA firms could offer more services.  The smaller bookkeepers could undercut us.  Trying to compete on those playing fields was a quick road to mediocre sales and profits.

So I changed the game!

In the tax areas, we concentrated on mid-year and year-end tax planning.  The tax return was still a commodity, and we really couldn’t charge more than the normal market price.  But our clients were very willing to pay premium prices to save on their tax bill.

We competed with the larger CPA firms by concentrating on profit and sales consulting to small businesses.  The bigger firms concentrate on the mid-size to larger firms, and really don’t want to mess with the smaller companies.  But these smaller companies need that help, and are very willing to pay whoever can provide it.

We attacked the bookkeeping market in two ways.  First, we sold QuickBooks training to the smaller companies.  This immediately saved them money by eliminating the bookkeeper.  Since we helped them, they naturally brought their tax and business consulting work to us.  Second, we sold automated outsourced accounting to those companies that had the need for an internal bookkeeper at prices that were below what that would cost them, but much higher than what bookkeepers would charge.

Notice that in all three situations above, we made it impossible for our customers to compare us to anyone else because we were providing solutions that no one else was offering.  They no longer could compare apples to apples because we were selling oranges!

This led to more repeat customers, more sales, and higher profits.