Ever hear someone say, “Your products are too expensive! I can get soap cheaper somewhere else!”
I certainly received this type of message quite a bit, which used to bother me until I accepted a few realizations. First, not everyone was going to be my customer. Second, I learned that trying to compete on price in our industry is futile, as there are always going to be companies who can out-price me, whether they be commercially massed-produced businesses or cottage industry competitors. I had to learn the difference between my cost and my value.
There is a big difference between selling your company’s cost versus selling your company’s value.
The artisan soap and skin care startup companies that set their branding tone through cost comparison often end up losing in the end…it sucks, but that is unfortunately what the market has become through the handcrafted industry and healthy competition. I will often see startups who want to strike the “affordability” chord, which is a nice thought, but needs to be carefully reckoned by knowing the true cost of the products they sell.
The affordability route usually doesn’t work simply because of the economy of scale problem that startups have, coupled with not knowing the true cost of manufacturing. If an established artisan company orders their raw materials in vats – several hundred or even thousands of gallons/liters, and your company is purchasing raw materials in 50 lb. pails, you are not going to be able to compete with them on price. If you try, your margins will be infinitely smaller than theirs, and they will eventually outlast you–as you will get burnt out making and selling stuff and never affording yourself a sufficient salary because there is no margin for it. Still, startups will try to bottom-out their prices in the name of affordability because they themselves have put too much stock on what they consider a fair price, instead of going by a sustainable set of numbers, which never lie. An artisan soap and skin care crafter can’t tote their wares as inexpensive commodities and expect to grow their business into a size that affords them financial livelihood.
Build a brand…not a cheap commodity. And we build a brand through creating value.
Simply put, “value” means all the things that can’t be quantified in a price tag.
Which means, when a customer is comparing your own company to one of your competitors, you need to be aware that there are only four real reasons people buy a product:
- Pain in the present: They’re experiencing a problem and need it fixed immediately.
- …It’s January…Dry Skin? Try our Whipped Shea Butter…etc…
- Pain in the future: They’re anticipating a problem and want to start planning for it now.
- Valentine’s Day is upon us! Screw the chocolate! Get your mate a soap…
- Pleasure in the present: They’re looking for something to fulfill an immediate need or desire.
- You deserve indulgence. You’ve spent the holidays working too hard for others…now it’s time for you to take care of yourself…
- Pleasure in the future: They want to invest now to reap the rewards later.
- Ready for his beard to shine come November? We’ve got just the stuff on pre-sale…
Unfortunately, there are only a handful of ways you can really differentiate yourself from your competitors. At the end of the day, soap is a commodity…it’s just soap (Gasp!!! How dare I?!!!), and people have been using some variation of soap for a long time, so how do you differentiate?
In terms of unique branding, you differentiate by being…UNIQUE. If you sound just like your competitor, who happens to be able to beat you on price, why the hell would someone buy from you? They wouldn’t! They would go to the cheaper company who sounds exactly the same as you! Using the exact same terminology and examples makes you sound like everyone else, so don’t. Be insanely unique.
Also, you must be inquisitive. This is a big mistake in our industry…us makers do a lot of assuming without ever asking. Ask more and better questions to the people who will ultimately put food on your table, your customers. See what they need from you and why they need it in the way that they need it. You don’t have to respond with blanketed terminology responses that we often hear, like, “Yes ma’am, my soap is made with lye. All soap is made with lye.”
What if instead, you did your homework and read up on the history of soap and told the legends and myths, along with historical data compiled about the presence of lye from ancient times to the present. What if you explained what it really is and how it works on a chemistry level. What if you spoke about all of your products and answered all questions through unique story telling? What if you changed the game by how you presented your company to people? What is the why behind the why you do this? Can you explain that? What is your story? What is the story behind your best-seller? The story behind your company’s name? Why do you have an off-white tablecloth at your booth instead of a bright white one? EVERYTHING MATTERS!…and everything has a reason. Be unique in how you voice your reasons and people will pay more for your products. This is value over cost.
And even with all that luster and savvy, you will still get someone who says, “I can buy this cheaper somewhere else. Why should I buy this from you?
To this I would say, kill them with kindness and disarming honesty.
People would ask me this all the time as they entered the doors to my storefront. I simply told them, “Absolutely you can purchase soap cheaper other places, and you are welcome to do so, as my company’s soap is definitely not for everyone.”
…I tried to create exclusivity in my response.
I would go on to ask questions like, “What kind of bread do you buy at the store?”
They would almost inevitably indicate some middle-of-the-road brand, often touting it as a health-choice in their response.
“Well, why don’t you just by Wonder Bread?” I would ask. “It’s a lot cheaper.”
They would inevitably respond with something like, “That cheap crap? There’s not even any nutrition in it! It’s not even bread!”
At this point I would usually smile, and they would as well, seeing the irony.
You see, even nickel-and-dimer folk make conscious value choices, they just don’t realize it. These people may never actually be your customer, but you can at least give them your best effort through supplying them with value beyond the utility of your product. Yes, your soap lathers and feels better than others, but that isn’t enough. What about your customer service? What about the story that goes along with the bar? Where do your raw materials really come from? Have you asked your suppliers? Is there a story you can compile from this newfound knowledge? Why does lavender smell like lavender? What are the constituents that make it what it is? Can you research this and pleasantly place this information somewhere for people to ponder?
Unless your economies of scale are high enough that places you among competitors on bottom-out pricing tactics, I would strongly discourage you from trying to be “affordable.” If your bar costs $1.35 to make and you sell it for $4.00, but your competitor’s similar bar only costs them $0.40 and they sell it for $4.00, they are going to win out, even if you play the long game.
Don’t compete on price. Compete on supplying intrinsic and unique value, which allows you to charge more with fairness. We as consumers do this all the time, with almost every purchase, whether we think we do or not. There are always cheaper products to purchase, but we perceive a higher value in any given product so we pay more for it. Now it is your turn to do this for your customers.
Lastly, you are not necessarily your customer. This is important to remember. If you are a penny-pincher, that is fine, but don’t assume your customers are. You can create an elegant, super opulent company and charge high-end prices even if you wouldn’t ever purchase products at that price.
THANK YOU SO MUCH!!
Very inspiring answers dude. I am thinking of starting soap making and these informations really help me to gain my knowledge and understanding of the product. God Bless!
this is incredibly generous of you , stay blessed.
Thank you for answering my unspoken question, why charge more than my competition?.
In simple jargon free style you have answered me.
I wont be afraid now to charge for the value of my product. Thanks again.
Nice post, thank you, and incredibly valuable information for makers who often lack confidence. Written for me!
Thank you so much! Well written and very interesting.
Thank you for sharing Benjamin.