I was advising a new client last week on pricing strategy.
Our philosophy at LogiCole Consulting: pricing is a positioning tool. We work with our clients to help them charge premium prices that are still significantly lower relative to the value they provide.
Another way to look at it – while they may be the highest priced in their markets, they are still the best deal.
There’s no advantage to being priced “in the middle of the pack” (a concept I first learned from Dan Kennedy). A few hundred more than this guy, a few hundred less than that one. Because now you’re just part of the noise.
To use price as a positioning tool, you must be on one end of the pricing spectrum.
You want to be priced at the high end – Ritz Carlton – or the low end – Wal-Mart. You can win in one of those two positions. Anything in the middle is fighting for scraps.
So why do so many practices feel the need to price themselves “in the middle” relative to other practices in town? The most common answer I get from prospective clients when I interview them: “Well, we want to be competitive.”
At first glance, this reasoning makes sense and even sounds admirable. But I would argue that “being competitive” doesn’t just limit your price, it can throttle the level of care you provide.
“Being competitive” is not the goal of your practice, and it’s a mindset is hurting you more than it’s helping you. Let’s address it…
Competition happens among teams in the same league. For example, C.B. is my almost-8-year-old son, and I coach his baseball team. We will compete against my neighbor’s team that he coaches for his 8-year-old son.
Both teams are in the same league. Our athletes have comparable talent levels. When we play, it will be a fair competition.
But is that what you want for your practice?
- “I want to be in the same league as other practices in town.”
- “I want it to be a fair competition!”
- “I want the levels of care and patient experience to be equal among me and other surgeons at other practices.”
- “I’m more than happy to serve patients down at the same level as everyone else.”
I doubt those thoughts have crossed your mind. Why?
Because you wanna be in a league of your own. You want people to look at you… and look at other providers around town… and think “Man, there’s not even a comparison.”
You want this scenario: C.B.’s 8-year-old team vs. my 5-year-old’s tee ball team.
They’re NOT in the same league. It’s not even a competition. No one would let them play each other because it wouldn’t be fair or even safe.
The fact that both teams play baseball is where their similarities end. And the fact that someone else in town does vision correction or cosmetic procedures is where your similarities end too.
So if you’ve felt compelled to embrace this “Be competitive” narrative, this is permission to stop. Do not allow yourself to be lowered to everyone else’s level. Do not limit your team’s beliefs in the type of patient experience and outcomes you can provide.
No need to be competitive when you’re in a league of your own.
– Troy “Keep Slugging” Cole
PS – If this resonates with you, check out the book Positioning by Al Reis and Jack Trout. h/t to Dan Wilson for mentioning this recently. I haven’t re-read it yet this year, but I’m about to give it another go.