Is it time to lower your standards?

19Jan09

Common sense tells us that a higher quality product will make customers happier, generate more positive buzz, and sell more briskly than a lower quality one. But higher quality products typically cost more than the competition, which limits their reach in the marketplace. So where do you draw the line between quality and selling price?

To answer that question, we need to look at the selling price and customer ratings associated with a hypothetical product. Let’s say your product costs $100 right now, and on a scale of 1 to 10, customers give it a 10. Your main competitor’s product costs $50, but only scores around a 5 on the same scale. At half the cost, though, the competitor is kicking your butt in the marketplace. Now, say you can swap out some of your parts for cheaper ones, which means the product will break more often or will weigh a little more or will scratch more easily. Bad things, for sure. However, the overall quality assessment by customers would still score around an 8 — and you can drop your cost from $100 down to $55. Should you do it?

Many of us would say no, and always insist on the best experience for our customers. But that way of thinking actually hurts those very same customers. Here’s why: anyone who can’t afford your premium product is going to buy the crappy, cheaper one that your competitor sells. As our numbers above show, they would be much better off buying the lower-cost version of your premium product. Even though it’s not as good as your no-compromises model, they’re still happier than if they bought something from the competition.

Putting this another way, you can’t deliver any value or happiness to people if they don’t buy your product in the first place. Those folks are stuck with the crap that your competitors sell, since it’s all they’re willing to pay or can afford. So while it may seem counterintuitive, you can probably make a whole lot more people happy by relaxing your internal standards a bit, and lowering prices accordingly. Whether you do this by making your original product cheaper or just introducing a new lower-cost version, remember that getting your product into the hands of more customers is a good thing for everyone.



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