Yesterday Hub Etzion, a co-working space located in Gush Etzion where I physically sit and serve as its board chair, hosted veteran PR & Communication strategist Alan Weinkrantz. Alan lent his talents by holding open “office hours” for over five hours for local businesses and startups. Then, later in the evening he hosted a pizza party and interactive talk, “Above the Code.” True to form, Alan, a believer in a healthy business ecosystem, didn’t come alone but rather with his friend and colleague, Ken Shostack (veteran BizDev professional and university lecturer).
Ken closed the evening by asking these three questions to the fledgling businesses and consultants in the room:
- What is your product?
- What is your value?
- How much are your customers willing to pay?
Knowing the answers to the first two questions is crucial. Knowing the answer to the third question will literally make or break your business.
1. What is your product?
This is the nuts and bolts of what your customers receive when they purchase your services.
Ex: If you’re buying a car, it’s how far back the chair reclines, the sound system, type of brakes, gas mileage etc.
2. What is your value?
On a topical level this is what separates you from your competitors. On a deeper level this is what Alan Weinkrantz refers to as your mission (see this presentation, slide 13). It’s what you hope to accomplish and the feelings you hope to engender through your product or service.
Ex: Volvo’s value could be the Peace of Mind it engenders because of its safety rating. Lamborghini’s value could be the Envy in invokes in the buyer’s neighbors. Toyota’s value could be Reliability/Dependability because of its infrequent visits to the mechanic.
(A more in-depth description on this concept can be found in the now-famous TED talk “Start with Why – How Great Leaders Inspire Action,” by Simon Sinek.)
3. How much are your customers willing to pay?
Well, this is the million dollar question. This question will determine if your great idea is a hobby or a job. The answer will let you know if the revenue from your brain-child is enough to support your family or just your ant farm.
But here’s where it gets really challenging: the only way to find this answer is to listen (see slide 9 of the same presentation I referenced above). It’s about researching the sector you’ll be involved with and the experts active in that field. It’s about finding the solution that your potential clients need as opposed to the product you want to develop.
Ex: Lamborghini has realized that for the value it provides, buyers are willing to pay upwards of $150,000. Toyota, on the other hand, realizes that reliability and price need to be more balanced and sells many of its cars between $10,000-$25,000. Volvo knows that consumers appreciate the axiom, “Safety First,” and that they can get away charging more for some of their models than Toyota.
So work backward and answer this last question first. Knowing how much customers are willing to pay and for what, is the key for success.
Unsure how to obtain the answers to these questions? Contact me to set up a free consultation. As always, you can follow me on Twitter or sign up for my newsletter for links to additional resources and articles.
Photo credit: Sharon Altshul of rjstreets.com