Being Viewed as a Commodity Will Affect What You Can Charge

As I expected, the blog post from yesterday about whether you should post prices on your site stirred up some great conversation. As I wrote, there is no right or wrong answer to this most provocative of topics. There’s one key element about the debate that I failed to mention yesterday. That is whether or not your business is viewed as a commodity.

In the most simplest of explanations, a commodity is a product or service that serves a very common purpose and whose value proposition is not particularly different from other products or services in its category. In other words, no matter where or from whom you buy that product or service, you’re getting the exact same thing. And it really has nothing to do with whether or not the product or service is considered “high end.” For example: an S-Class Mercedez, despite being a luxury vehicle, is a commodity. I can go to ten different dealers in my city to get one, and each car will be the same no matter where I go. (Well, not ME personally. I drive a…well, let’s not talk about what I drive, except to say it’s 100% paid off. :) A commodity service might include something like an oil change. As long as I get the specific oil I need for my car, it doesn’t particularly matter where I go to get it. Granted, in both of these examples there could be subtle differences in how the service is rendered or benefits a dealer might throw in. But, the main thing I’m buying (i.e. the car or the oil change) is in and of itself the same across the board.

When a product is a commodity, PRICE will inevitably be the most important factor when determining where to go to get that commodity. So, if your business is a commodity, competing on price will be a given (in which case if your prices are competitive, including them on your website would be a good idea).

So the $100,000 question is: are you a commodity? If you’re a professional creative, chances are there will be three key aspects of your service that will determine if you’re considered a commodity in the eyes of the prospective client:

  1. The Final Outcome. How does the final outcome of your product compare to your competition? Does it stand head and shoulders above the rest? Does it have a distinguishable style, or is it not that much different than what the guy down the street is doing? Can it be considered truly unique?
  2. The Experience. What is it like working with your company? Is it crazy fun? Does your company provide exceptional customer service? Do you provide some additional value that transcends the actual final product? For instance, our photography business Teen Identity specializes in teen girl portraiture, but we’re also about raising the self esteem and confidence of every teen girl in America. Girls don’t just walk away with great photos; in many cases they walk away with an indelible impact on their lives. That’s something Glamour Shots or the local Sears photo studio is not providing.
  3. You. Lastly, what do you personally bring to the table that sets your company apart? How many years of experience do you have? What is your demeanor? How much of your personal “signature” is on the overall experience and the final product. Pixar is a studio that has a very specific brand and style. But the final outcome and the experience of making a Pixar film will vary greatly from John Lasseter directing (Cars and Cars 2) vs. Andrew Stanton (Finding Nemo) vs. Brad Bird (The Incredibles).

Jay Maisel vs. Zack Arias

I know a lot of my readers are photographers so I want to offer a quick example that I think effectively exemplifies all three of these qualities. A commercial client looking for a top notch photographer will have a completely different outcome and experience between a photo shoot with Jay Maisel vs. one with Zack Arias. They each have a distinctive style and as artists bring a their own certain je ne sais quoi to the table. Yet neither of them would be considered a “commodity.”

Hotel Hunting

Earlier this year, expert wedding professional Michelle Loretta of Sage Wedding Pros wrote her own blog post about the topic of having a price on your website. Her take was different than mine, which is okay. But I found one of the comments on her post interesting. In defense of putting prices on the website, one commenter referenced a time she and her family were traveling cross-country and looking for places to stay. They didn’t have time to fill out forms or make a lot of phone calls. They needed to know right away if the price was in their budget. That is a classic case of needing a commodity. In this case, the commodity was a safe and decent place to bed the night. In situations like that, price is absolutely a key factor.

However, I bet it’s safe to assume that if they were planning a special vacation, maybe a 10th anniversary trip, or a long-over due vacation, things would be different. It’s not to say price wouldn’t be important, but it’s safe to assume it would be far less important and probably not the main determining factor. It would be worth the time and effort and research to find a unique locale that provides an amazing experience. The right location may be worth paying ten times more than what may have been paid on the cross-country trip. In other words, a Holiday Inn is a commodity. The Rosewood Mayakoba in the Mexican Riviera ain’t.

So my dear blog reader: what are you?

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7 Responses to “Being Viewed as a Commodity Will Affect What You Can Charge”

  1. Ron,

    I feel strongly that having pricing on your website and whether you are viewed as a commodity are completely orthogonal. Our brand experience is always about transparency and openness. For us it is a logical extension to include our entire price book available for any one to see.

    Our prices are among the highest in our market and we almost never have issues dealing with bargain-hunting couples, which both fly in the face of a definition of commodity.

    It is all about ease of access to information and open communications from our first interaction.

    • Hi Frank. Thanks for the comment. I don’t know if you had a chance to read what I wrote yesterday, but in case you didn’t… my whole premise is that a high price on a website may turn off clients that may otherwise decide to hire you once they get an opportunity to build that rapport. My personal experience has borne this out many times. I don’t think excluding your rates is not being open. In fact, quite the opposite. It OPENS the doors of communication more.

      As I mentioned before, you pick what’s right for your business. I know that when I was a high end wedding videographer, I needed every opportunity I could muster to educate brides about video and get them to know me. There was so little knowledge about what was possible. My rates would have scared off many clients I ended up getting once they engaged me and my work. It’s very different with photography. Clients have such a higher value of it in general, they go into it knowing the really good ones are expensive, and since they value it, they may not be turned off as much. So, if the business you’re getting as a photog is vibrant with your prices listed, then I can see your point. Why bother with price shoppers. More power to you.

      As to whether including prices on yours site and being a commodity are orthogonal (which I must admit I had to look up :-) I disagree. If your business is a commodity (which isn’t necessarily a bad thing) then having prices on your site will be a good strategy just about all the time.

  2. Zack Arias doesn’t make money, or much of it from photography as far as i understand. He is not pulling clients willing to part with higher dollars, he makes money teaching ocf and power to him for that. So how does that tie into the idea he is not a commodity.

    • Oh that’s an easy one. First, how much one makes has nothing to do with whether you’re a commodity. Second, Zack’s style, the experience of working with him is not something you can get from any place else other than him. Lastly, you can be a non-commodity in one area, and a commodity in another. My company (I hope) is not viewed as a commodity with regard to the marketing communications, strategy and production services we provide to our commercial and non-profit clients. However, there are some service we offer that are indeed commodities. I will go and video tape a seminar for a client if they want me to. There’s no distinguished style or experience from that. So, that part of my business is a commodity. But, if a client wants a full blown promotional video, they’ll get a product and experience that will be different from my competition.

      Packaged education in and of itself is typically a commodity. So, you could make the argument that a DVD about OCF from Zack could be just as worthwhile as a DVD from some other guy with equivalent experience. And with sites like CreativeLive, the commoditization of education is in full effect. However, that doesn’t mean the photography services Zack offers is also a commodity.

      Hope that answers the question. Thanks for commenting.

  3. Putting a starting price is what I do. As event cinematography is growing, the difference in budget is getting bigger. By putting our starting price, “AFTER they watch our demos”, they can decide on the spot whether to email me for more info or turn away to different direction. Saving their time, saving MY time at the same time.

    Another great post, Ron. Always appreciate what you put out there.

Trackbacks/Pingbacks

  1. An Economic Lesson All Creative Professionals Should Learn – Price Elasticity of Demand | Dare Dreamer Magazine - February 10, 2012

    [...] As I’ve written before, if you’re a commodity you stand a greater chance of your services being more elastic. So here are two questions you should ask yourself: [...]

  2. FAQ: Pricing your photography business. » Alex Beadon Photography - March 26, 2012

    [...] Being Viewed as a Commodity Will Affect What You Can Charge by Ron Dawson. [...]

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