When a potential client asks why you are priced so much higher (or so much lower) than a competitor, the initial impulse is to compare everything you offer to everything the competition offers.
While this may sometimes work, it is often a fool’s errand, as it immediately commoditizes the services you provide.
The simple fact is that you most likely don’t know why your competitors are priced the way they are.
- Maybe they have a spouse bankrolling all of the family expenses, so they can afford to take a loss on projects as they build a brand name.
- Maybe their only annual sales goal is to cover private school tuition for their kids.
- Maybe they dropped out of law school and still have six-figures of student loan debt to consider.
- Maybe they are motivated by the social signal of having the Louis Vuitton logo on all of their accessories.
- Maybe they want to provide scholarships to Ivy League universities for orphans and foster kids.
- Maybe they chose their price based on outdated advice given at an industry association meeting.
- Maybe they are driven by ego and/or need for approval and will emotionally price projects to never lose a gig.
- Maybe they don't understand luxury strategy and their price is only based on the equation of cost of goods + time.
- Maybe they have higher overhead.
- Maybe they have lower overhead.
- Maybe they just picked their numbers out of the air.
You don’t know. So why not just say so?
Why are you $15,000 when Sally Anne Events is $5,000?
"I’m not involved in creating Sally’s business strategy, so I don’t know why she is priced the way she is. I am confident in what we offer and the experience and expertise we bring to the table and our pricing reflects that."
Maybe you expand on this explanation. Maybe you don’t.
Whatever you do, never knock the competition. The wedding industry is like a small town – it will get back to them. It will always get back to them.
More importantly, you may need to collaborate with them in the future. If you’re competing on the level you want to be, then your competitors are also good at what they do.
If you know the 'why' behind your pricing, you can stand behind it.
Originally published June 2016