What One Business VoIP Provider Says About Profitability

Pricing is a dangerous way to lead the market. There’s always going to be a competitor that can out price you, especially if it selects a competing product to be its loss leader. The key to success in the market is to price your product or service at a level your customers are willing to pay, while demonstrating the value you bring to the table. Notice that doesn’t say you have to have the lowest price in the market – it just has to be perceived as a good value.

Business VoIP solutions provider, Nextiva, recently posted a blog about the virtues of pricing competitively and making a big profit. With the arrival of the Internet, this has become somewhat of a challenge. For instance, a vendor may offer to renew a service I have used for years. But, if I happen to find it for a lower rate on Amazon, shouldn’t the vendor be able to match the price? This was the question examined in the Nextiva blog and apparently the answer was, “No.”

I do understand the challenge. Before the Internet eliminated borders, distributors could set prices according to the geographic location of the target market or the industry channel used for distribution. Today, many products start out as a commodity and consumers will shop for the lowest price. As a result, the price of any product should be the same throughout the distribution channel. This doesn’t mean that manufacturers have to match the price of the competitor’s product; but it does have to match its own.

Just as business decision makers can easily argue the virtues of the business VoIP solution, so too can these same leaders argue the value of pricing that beats the odds. The key is to stay away from selling commodities. If consumers can buy it anywhere and the competitor makes the exact same thing, it’s hard to set your own price and profit margins. This changes as soon as you focus on differentiation and value. Consumers will pay more for value, as long as it is perceived and demonstrated.

Remember the key to boosting the bottom line is in profitability. If high sales actually generate low profit dollars, something needs to change in the business model. Profit margin is what contributes to the health of the business, so it’s best to focus on selling less at a higher margin. And, if you can specialize and be known for one thing, the consumer already knows where to turn to satisfy that need. To maintain that value at all turns, support the distribution channel.

Whether your focus is communications, toy trucks, the latest fashions or technology, remember that your customers are looking for the best value overall. If this is your primary focus, you’ll enjoy the resulting benefits.