Why is it that a Starbucks cup of coffee always tastes better than coffee at home? Or, that a 911 Porsche suits my personal style more than a KIA? Coffee is coffee, right? And, isn’t the point of a vehicle to get you from one place to another?Yeah, right!
Okay, what we are talking about here is the perception of value. Value and worth are not necessarily interchangeable. Value is actually a very emotional response to a product or service. Would I spend more on something unique, than something that I can get everywhere…absolutely! Electricity is a commodity. I really don’t care who sells it, I just want it at the lowest price. Gas for my car is another commodity. From one gas station to the next, they pretty much sell the same thing. Give it to me cheap and I’m a happy camper.
Products and services tend to become commodities in mature markets that are flooded with people selling the same thing. To a consumer, there is little difference between one provider and another. Once a product or service loses it’s uniqueness in the eyes of the consumer, price is the only differentiator.
Peter Drucker got it right when he said, “In a commodity market, you can only be as good as your dumbest competitor.” I’d hate to think that my only business edge is a dumb competitor. Although, I have to admit to thinking that my competitor is an idiot on more than one occasion.
While I don’t think that commoditization is running rampant throughout the photography industry, I do see hints of it creeping into some areas. Take the stock image market for example. Every soccer mom with a digital camera thinks she can shoot stock these days. The tremendous volume of images flooding the market has created a lot of price pressure for the guys who have been making a good living at this for a number of years. When you consider the amount stock agencies are willing to pay for an image and the cost of getting to the location, the equipment, lodging, assistants, etc., you have to wonder whether it is worth it.
Another example is the senior portrait market; look at the price options out there…$50 for a 2-hr session…please. And, let’s not forget wedding photography. Who hasn’t heard of an Uncle Bob story with his newly purchased digital camera? What about lighting, posing, composition? Think Uncle Bob is doing a great job with that? Of course not, but people are drawn to deals…especially when they don’t understand the difference and value of a professional.
What we are seeing is a lower perceived value for what we do for a living. So, how do we stop it? We simply start selling ‘value’ and stop selling ‘price’!
Do you think that Porsche is going to drop the price of their 911 from $70k to $20k because GM or Toyota is cutting prices to get inventory sold? Not likely. What about Starbucks? Are they going to reduce the cost of a caramel latte just because the diner down the street dropped their coffee fifty cents? Not a chance. They are selling ‘value’ not ‘price.’ They know that not everyone can afford them, and that’s okay. They understand their market and they are constantly innovating, bundling and segmenting their product lines to increase the perception of value.
The more valuable something is, the more it is worth. Unlike a commodity with fixed and comparable price points, a ‘value’ transaction is always subject to negotiation. Your perceived value to a customer is directly related to how much you will be able to charge.
Let’s look at our industry for a minute. Do you think that an Uncle Bob wedding is comparable in value to say, a David Ziser wedding? Of course, not…there is no comparison. Do you think that a soccer mom’s video presentation is comparable in value to Philip Bloom’s ? Of course not…there is obviously no comparison. So why, then are customers using these people, thinking that their delivered product is ‘good enough?’ The answer is pretty simple in my mind. We’re downright awful when it comes to communication! We tell people that we bring quality and service to each project and think that is enough to convince them. Do you know any photographer that doesn’t have those exact words on either their website or brochure? Exactly! People have become numb to those words.
Instead, why aren’t we describing the value we bring to a project with the number of years in the business, the highly-recognized clients who have entrusted their business to us, the investment in equipment and training that makes us better at what we do than the next guy, or how about the unique artistic style that is brought to each shot? How we communicate these things to clients in terms of presentation and packaging will determine our ‘value’. And, value in the eyes of the customer will determine price, not the market.
I know what you’re thinking. That ‘dog won’t hunt’ when you’re face to face with a client who is shopping for deals. Okay, you’re right…you will always have to negotiate some deals, and in this market probably more than any of us would like. However, wouldn’t you rather negotiate from a position of strength than weakness? In my mind, strength is value and weakness is price. If all I have to negotiate with is price, than I’m no better than the soccer mom with a new HD-DSLR thinking that I can shoot like Philip Bloom. The reality is that when you only consider price you are failing to realize the value you bring to the project. When you lower your price to close a deal, you’re basically saying one of two things. Either you’re saying ‘I don’t believe I’m worth it,’ or ‘I was too high to begin with’. The solution is to leave your price where it is and look for value adds (soft dollars) to sweeten the deal. Or, reduce the amount of time or the scope of the project to meet their budgetary requirements. Both solutions offer negotiating strength without downgrading your ‘value’ in the eyes of the customer.
How you price your work has more to do with the ‘perception of value’ than what most people realize. Each photographer brings something unique to the market in terms of artistic talent, skills and experience. Effectively articulating this uniqueness to customers is the difference between a business strategy that is built on value and one that depends largely on your competitor being dumb, as Peter Drucker would say.
Deborah has been a marketing and business professional for over 30 years and has had a digital marketing business for almost as long. Earlier in her career, she founded two technology companies and two traditional book publishing companies as well.Company: Embella, Inc.
Phone: 315-628-1214
Email: dkaufman@embella.com
Website: www.embella.com
Blog: www.deborahkaufman.com
Twitter: @deborahakaufman
Facebook: http://www.facebook.com/profile.php?id=1626295695
Photo Credit: © 2010 David E. Warner
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