Pricing and Distinctive Competencies

 

Oscar_Pistorius_at_International_Paralympic_Day,_Trafalgar_Square,_London_-_20110908This month’s activity of the week is Distinctive Competency. This has a direct relationship with pricing.

A distinctive competence is a distinct core competence. In other words, it’s something you are very good and your competition isn’t. When your products take advantage of your distinctive competencies, then by definition your product are differentiated. Your products have your distinctive competencies. Your competitors don’t.

When pricing products that have competition, you start with your competitors price and then add the value of your positive differentiation and subtract the value of your competitors advantages. Your distinctive competence is one of your positive differentiators, as long as your market values it.

If your distinctive competence is so strong that it essentially makes you a monopoly in your market (i.e. your buyers only consider your products and don’t even consider any competitive products) then that directly impacts your pricing. You have created market conditions and products with no competition. In these type markets, buyers are relatively price insensitive, meaning we can often charge higher prices and barely lose any business.

Distinctive competencies are inherent competitive advantages. Create products that take advantage of your distinctive competencies and you are creating products you can charge more for.

 

Photo by Nick Webb