Most entrepreneurs I've heard convey the same message in different ways: it's all about presenting and building value so that the client pays you what your product or service is worth. Most startups, though, tend to default into this mindset of charging less than the competition in order to drum up some business quickly. While this tactic can work in the short-term, it cheapens the value that a business is supposed to provide. Why do they do it, though, and what can be done about this? Well...
They Commoditize To Survive
This is what the 50 Billion Dollar Man Dan Pena would say "playing to not lose." Oftentimes, this is a way for the business to drum up more business and play a game of volume rather than profit margins. It's a way to keep your business afloat, but it isn't sustainable by a long shot for more reasons than simple revenue. This MAY BE a valid solution for a longer period of time with businesses that deal out physical products, but for services like consulting and coaching, it's unsustainable for a number of reasons, one of which is that you will hit their limits for how much you can do at any given time fairly quickly while barely sustaining yourself with the slimmer margins that you're now collecting. This is ESPECIALLY dangerous to services that deal in a niche market where the following is already a small percentage of the general population.
So how can you fix this? This problem is less an issue of tactics and more an issue of MINDSET. Commoditizing is a ridiculously easy strategy and one that reflects the mindset of simply trying to survive rather than aggressively growing your business for the betterment of your clients. In order to achieve the mindset change, it's critical that you, the service provider, think instead of how you can better present yourself to your audience and showcase that you're truly worth what you charge rather than going the easy route and making yourself look cheaper than the competition. It's a difficult task in the short-term, yes, but in the long-term, this allows you to serve more clients and make more money with less hassle by attracting only the most committed clients, keeping the cheap clients out of the narrow end of the marketing funnel, and giving you MUCH LESS OF A HEADACHE, since you'll be dealing with people you want to work with. Mindset is the most critical here, but it's far from the only step. The next step is that...
Some Service Providers Have Trouble Marketing Their Services
In all fairness, this isn't exactly something that any kind of finger pointing can help with. Some experts have trouble communicating their value, and that's okay because that aspect of communication isn't something they were taught when they were picking up their skillset. Marketing is its own beast, and it's perfectly alright to start off without much of a clue in marketing if you have never been able to touch on marketing in their lives. It is critical, though, to acknowledge this shortcoming and find a way to fix it, preferably immediately if not sooner, and sooner if not later. There shouldn't be a later for this, because that can become a never.
So what's the solution to this? The very first solution that anyone might have would be to brush up on marketing, but that can only take you so far if you're becoming a one-person show. Learning to market and then putting time into that for the sake of doing business can be an issue if it cuts into the time you can spend actually serving your clients. Now, this issue can and usually tends to be a short-term problem once the your business takes off. But why wait to make massive gains and take massive strides? A better solution would be to outsource marketing to someone whose entire skillset revolves around marketing and putting the spotlight on the service provider. While it does cost money to get this done, it also spares you one resource you have to protect with ferocity: time. Although, if the marketing system is consistent and predictable and the provider is setting the right prices for their services, the issue lies in the narrower end of the marketing funnel.
The Service Provider Can Have Issues Closing
No matter how good a marketing system is at lead generation and pre-qualifying, it can all go down the drain if communication between you and the prospect is a sinking ship. And this all relates to a previous article I posted about how communicating and building value is a major must, regardless of whether someone's an entrepreneur or an employee. Good communication can be key to landing that job or closing that sale.
Now, how can you fix this? Well, one solution would be to brush up on a little salesmanship by reading some books and learning how to communicate what you're worth. And it's totally doable because salesmanship is communication and persuasion put on a pedestal. Another, perhaps short-term solution, would be to get someone who can sell your services so that you can, again, focus down on what you do rather than how you'll sell it. There can be plenty of other solutions, since there's more than one way to slice bread. This just presents two.