One of the great advantages entrepreneurial managers possess is the very real, inner core belief in the specialness of what they are offering. As has been noted before, this hyper competitive world we call business almost requires a zealot’s mindset to withstand the daily challenges and tribulations.

But there continues to be a significant gap between what many entrepreneurs feel is the special value they offer and their ability to successfully convey this positive difference. The results are manifested in too low prices with too low margins underscored by a week to week survival mentality.

Unfortunately this problem often starts with the initial launch of the adventure. Recognizing the need to establish some market position and anxious over the probability of zero incoming cash, the entrepreneur discards the value aspect and settles on the easy cash point. As with almost any product or service, if you price it cheaply enough, someone will buy it. But when this bottom feeding purchase takes place, a pricing level is established and with it a balance of price and features aka value.

Recognizing the desirability of over delivering to a customer, most entrepreneurs initially score very high on the value chart. They deliver more, usually a lot more, than a potential competitor at a cheaper price, usually at a lot cheaper price. Only when they sit down at the end of the month and start going over their financials do they discover that their business at their previous value point more resembles a charity than it does an ongoing concern.

The interesting thing is when you talk to entrepreneurs who have gone through such an experience, you find out that very little thought was given to this most important item called pricing. When you ask them how they arrived at their price points, often the discussion is as simple as, “Well, this is what ABC company is charging for theirs.” When you ask if their product is the same as ABC’s, invariably the answer is negative, which begs the question, “Then why are you charging the same? If your product or service is truly better, and better means higher value for the customer, then why wouldn't you ask the customer to pay more?”

Of course, if the product or service in question is a “me, too” offering, then the entire discussion on value is meaningless, and the price point will be reduced to a commodity perception in the eyes of the customer. Why you would ever even want to start out in a business with these prospects of course defies logic? But assuming that the product or service is truly “better,” then this fact must be clearly and succinctly communicated to a customer and underscored by pricing.

Entrepreneurs often think and feel that just because they “know” the wonderfulness of their product or service that everyone else, especially customers, will also recognize this same wonderfulness. Experience tells us this is not true, and this is where professional marketing and sales assistance can be a worthwhile and strategic investment for many entrepreneurs. If what you bring to the entrepreneurial party is more of a technical or mechanical expertise, consider investing in someone whose expertise will allow customers to both share and pay for your belief in wonderfulness.

John F. Riddell Jr., director of the Center for Entrepreneurial Growth-Hamilton County, writes each Tuesday about entrepreneurs and their impact on companies and the marketplace. Submit comments to his attention by writing to Business Editor John Vass Jr., Chattanooga Times Free Press, P.O. Box 1447, Chattanooga, TN 37401-1447, or by e-mailing him at business@timesfreepress.com

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