You Get What You Pay For
It is always a difficult task to decide what to charge for your products or services. You need to make sure you provide enough value, that you are priced competitively, that others will pay for your value, etc. As business owners, we are all familiar with the process; it is not an easy one and one that requires a lot of thought, research, objective reasoning, and common sense.
I am currently working with a client where this specific topic came up. The client is Yardsales.com and has just recently re-launched/re-branded their business model and website in some very exciting ways. One of the revenue streams comes from their Premium Membership which provides customized email/text message alerts about yard/garage/estate sales happening in the subscriber’s area according to their specifications/preferences.
As is to be expected in any industry niche, there is competition. What happened in this case is that as the business model is new, the question came up – since there is another company “out there” offering FREE alerts, do they change their direction and also offer their alerts for free, thereby eliminating one of their main revenue streams?
In this type of situation, a business owner has two choices – react or respond. Reactions can be impulsive, emotional, and oftentimes based on fear. Responses are more rational, involve more thought, include weighing the pros and cons, and are generally a better direction to move in when it comes to such important business decisions. Look at this way, did McDonalds start giving their hamburgers away for free when Burger King opened their doors?
Yardsales.com chose to respond rather than react. The business owners looked closely at the offerings of the company giving their alerts away for free and their offerings. They did side by side comparisons by literally putting in a zip code in the search field to see how many alerts came up on both sites. Guess what? Using the same zip code, the competitor pulled in FOUR sales in a 40 mile radius while Yardales.com pulled in ONE HUNDRED AND FORTY FOUR. Okay, right there, it is obvious to anyone that the databases where the information is being pulled from are NOT equal. Clearly, Yardsales.com has a much more complete database. That alone, to me, is worth the $29/year. But it gets even better than that. This competitor does not send alerts to one’s mobile phone. Another biggie – especially for the target market of those who really need and want to “get there first” and find out about the yard sales in their area before someone else does. There are hundreds of thousands of people in the world who make a living buying things at yard/garage/estate sales and selling them on sites like ebay and Amazon. These people are not carrying around their laptops in their cars as they are rushing to get to the best sales as soon as they open. They NEED to have this information available to them via their cell phones. Point closed
Guilty – sort of – as might be charged that this is a sales pitch for Yardsales.com. It isn’t because this case truly points out what I consider to be very valid choices, directions, and challenges many business owners face. It isn’t because it brings up the important difference between reacting and responding. With that said, if you know of anyone who DOES need to “get there first” – please do tell them about Yardsales.com. You will actually be doing them a favor