Is Your Core Business a Commodity?

Remember when travel agents were an essential piece of any vacation? When you only had a few choices  when you needed a print job? Remember when only real estate agents could access MLS information?

All these industries changes with the Internet, and a lot of their core services became commodities.

Yet, there are travel agents, printers and realtors (example 1, example 2) who thrive in this brave new world.

Even without the Internet, certain products and services have become commodities in the eyes of consumers, such as PCs. Even in Web development there are plenty of DIY plans offered by companies like GoDaddy, Network Solutions and Yahoo that flyte can't compete with on price. Heck, I spend more on gas coming to work in the morning than some of these plans cost for a month.

Even without computer programs that can create Web sites for the HTML-challenged, we compete with thousands of people who are working out of the garage who don't have the overhead that we do and can develop sites for much cheaper. And don't get me started about Web developers in developing parts of the world. It is a flat world, after all.

So how can we--or you--continue to thrive in a world where everything becomes a commodity? Where computer programs can drive down the cost or perceived value of anything we can create?

I'm not sure I have the answer, but I feel it may come from offering more on the service side. Treat things that have become commodities as commodities and pile on value-added services until they spill off the plate.

You really need to be realistic and acknowledge that things are changing around you. Although that can be difficult, you won't be able to make the strategic changes necessary to survive and grow unless you are honest with yourself.

You can also move into more of a consultative role with your clients. If there are no margins on your widget or the market has driven down the worth of your service, you can still find a role helping people make the most of your widget or service.

With flyte, we've made a concerted effort not to just build Web sites, but to create Web strategies (with the Web site as the hub) that help businesses grow. We stress search engine optimization, email marketing, blogs, podcasts, and everything else that makes the Web site a bigger piece of a company's sales and marketing plan.

We find clients who see the value in this approach and we partner with them. This also helps us weed out prospects who don't see the benefit of what we offer and will never be happy paying for it.

What's your value-added proposition? What can you do to separate yourself from your competitors who don't yet see the writing on the wall?

Now that's something to think about for the new year.

Rich Brooks
Value-Added Widget Provider

Comments

[Chris Burbridge]

Good topic! I was coached to charge $35/mo for my web hosting, because I offer a self-publishing system (really, an implementation of WordPress, but for my clients that's probably more detail than they want), and some other features that serve them. So far--almost no resistance! The point is, for people who don't have a sense of the web hosting market, they're still FINE to pay that much for hosting. But then, it's like when you find out that the thing you're making, someone can get from China for about 11% of the cost you're charging. What do you do? Immediate impulse: Tail between legs, say "sorry, I'll charge $20 now," and hope people go for it. But I think the problem IS when you get seen as a commodity. So, the answer is to pile on that value--in ways that make you more and more something that simple CAN'T be compared, to say, GoDaddy. And as a small business, I have lots of advantages that GoDaddy doesn't have--but economies of scale certainly aren't among them! I am quite optimistic, in fact. But I realize that simply "hoping poeple won't find out" that "they make the same thing in China for a lot cheaper" is probably not a good strategy.