Notes for an Entrepreneur - The value of your offering

Kayani bakery in Pune sells its wares at prices way above the standard market rates for bakery products. Yet people stand in line to buy their Shrewsbury biscuits and Mava cakes. No-one dares argue with the Parsi proprietor about their prices lest they are asked to leave the store.

If you find your customers are negotiating with you on the monetary cost component of your quote, you have been unable to convince them of the benefits of your offering.

Marketing 101 has taught us that customers seek to maximize value, defined as Benefit - Cost. If they do not see incremental benefit in your offering over a competitor's, then the only way for them to try to maximize value is to try and hammer you down on cost. This is your cue to steer the discussion back to incremental value. If you do not offer incremental value, you need to ask yourself why you deserve a premium over the competitor.