I want to start off by saying this: I love my barber. He’s friendly, attentive, and helps me feel and look great every time I leave the shop. Not to mention, he’s just an all-around great guy. He’s also more expensive than your average haircut, which leaves me about $40 lighter every time I pay him a visit. But I happily pay this amount every couple of weeks. Why? The haircut and experience are worth every penny.
Recently, the shop had to undergo renovations for 3 weeks and I was due for a haircut. Upon learning about the renovations, I personally reached out to him (we have each other’s numbers, which is amazing, amiright?) and asked if he did house calls. I figured: (1) he’s out of work for a few weeks, (2) I’m sure he’d appreciate making a few extra bucks and (3) I definitely wouldn’t want anyone else cutting my hair. The good news? He did house calls. The bad news? The tab would be $80!
HOLY BE-JEEZUS WHAT?! $80 for a haircut?!
Apparently, (I soon learned) doubling the regular rate for house calls was a standard industry practice. While I’m sure he has clients who would’ve happily paid that price, I knew that I wouldn’t be one of them. I thanked him and made an appointment with him for the following week, when the shop would be reopened and the haircut would cost the “regular rate”.
So what can we all learn from this?
Consumers will generally be okay with paying above-average prices for a particular good/service if the value proposition makes sense for them and they can afford it. In my case with the barber, on any other given day, it would’ve looked like this:
|a haircut||an amazing haircut|
attention to detail
friendly & professional
complimentary cup of coffee, made to order
For me, everything in the value proposition was appealing to me, and well worth the $40 I would regularly (and willingly) spend for it. This was not something that I simply needed, I wanted it too. Thankfully, I could afford it as well.
However, consumers will not pay a premium if the value proposition does not provide any value to them. Perhaps they don’t drink coffee, maybe they don’t enjoy head massages, or they really just want someone to “shut up and cut my hair”. If that’s the case, a $40 haircut wouldn’t make sense for these consumers. In that same way, an $80 haircut wouldn’t make sense to me, simply for the added convenience of doing it in my own home (especially if I could wait 3 days and get it done at the shop for the “regular rate”). While I could afford an $80 haircut, the value simply wasn’t there (for me, at least).
“We found someone cheaper.”
It’s that dreaded phrase every business owner hates to hear. Whenever I see my wedding industry colleagues complain that it’s a constant and perpetual race to the bottom, I genuinely and wholeheartedly disagree. The 2 unequivocal conclusions I can glean from this observation is that:
- They’re not marketing to the right group of people.
- They’re not listening to the prospective client and providing the “right” kind of value.
Example 1: I would love to spend $25,000 to take my family to Bali for our next summer vacation. I definitely see the value in the trip and it would be an incredible experience for everyone, but we simply would not be able to afford it. If a travel agent were to try and sell us on this trip, they’d be barking up the wrong tree because we seriously don’t have that kinda money!
Example 2: For our honeymoon, we spent approximately $10,000 for a week in Bora Bora and 2 weeks in Seoul, South Korea. This was an expensive trip which was slightly above our original budget, but we (1) saved 18 months for it, (2) saw value in this once-in-a-lifetime experience and could afford to splurge (just a little bit).
A common mistake I sometimes see is a $4000 industry colleague trying to market/sell to a $1500 client. It doesn’t matter how amazing your service or offerings are, they are NOT your clients. Sometimes, people have real budgets and you have to genuinely respect that. If there’s another industry colleague who can do it for $1500, that’s none of your business, because that is not your competitor either. This is nothing to be upset about, because it’s just a simple matter of square pegs and round holes. The rejection you’re experiencing is not a reflection of you or your talents. The marketplace is infinitely huge, and you simply have to market to your niche.
Another common mistake I occasionally see is a $4000 industry colleague trying to market/sell to a $3000 client (which is totally within acceptable range to sell to) – and they totally drop the ball because they were not speaking the client’s language. I see many industry colleagues showing off their work, listing all of their awards and accomplishments, and talking about their skills and experience. And then crickets. This is all fine and dandy – but what about the clients? What are the clients’ pain points? How can you make their life better? Where can you provide the right kind of value that’s important to them?
I know there will be doubters and naysayers who believe that budgets are imaginary/arbitrary numbers and clients don’t know how much things really cost. They believe that if clients really, really wanted something, they’ll figure out a way to pay for it. But here’s the God-honest truth: modern day consumers are savvy: they have specific needs/wants/desires, and have a rough idea of how much they’re willing to pay in order to fulfill them. Of course there’s always a little bit of wiggle room in the budget; and if the business owner is providing the right kind of value that is specific to the client, at a price that’s reasonable to the client, it can definitely be a win-win situation for everyone.
And had the barber offered to cut my hair for $50, I wouldn’t be looking like a homeless dog right now – but that’s a conversation we can save for another day :).