How To Command Premium Prices Over Your Competitors

In the early stages of entreprenuership, making money is so difficult that you'd be satisfied with any business model that makes you money. However, making money is not in the amount of revenue you bring in, but it is in the net margins you can command in the marketplace. In this article, we will explore how to position your business and find a product which can achieve exactly that. Let's begin.

Business On Hard Mode

Doing business on hard mode is when your product is commoditized. Commodity prices in itself is not a problem when you have achieved economies of scale, but it is a problem if you are a new market entrant. As a new business positioned to charge commodity prices, you often lack sufficient profit to reinvest back into your operations.

Creating a product with superior deliverables requires targeting a niche that have sufficent disposable income. If the market cannot pay for goods and services that can cover our costs with a healthy net margin, we have no hopes of building a business that can grow.

Additionally the overall sector that you are targeting must not be declining. What I mean by this is not your industry, but for your niche. If you are a painting company selling X niche, you should be looking at the industry growth for X niche, not for painting itself.

The advanced entreprenuer can say no to money during his search for a profitable business model. It is best practice that we can start off our business with an offer that can command a premium over our competitors. This requires the entreprneuer to stay patient until he discoveres his innvoation.

Rule: Margin first, revenue later

How To Find A Profitable Business Model

First, go talk to real customers. Not on the internet or in some survey disconnected from reality, but actually approach them in real life and have a productive conversation. In the first 6 months of your commitment to your idea, this is most likely what you will be doing. Find out:

1. What do you think could be an acceptable price?
2. What do you think would be an expensive price?
3. What do you think would be a prohibitively expensive price?
4. What features would be the most important?
5. Find out why they said what they said at the end of every answer

Once you have collected a sample size of 20 real life conversations from the same niche, take a look at which features are the most cited between all of them. Now, go find out the costs of what it would take to deliver these solutions to your target niche. Do you have a healthy margin?

If the answer is yes, recontact all of the people you've just talked to and give your v1 offer, reiterate until most of them become your customers. If the answer is no, hypothesize a different target niche and repeat the same process. Keep doing this until you land upon a niche that is profitable.

Rule: Design your products based on real world conversations

The Seven Types Of Business Moats

What you probably understand now is the beast called your competitors. Unless you are in a new industry, most likely there are some incumbents that are entrenched within your niche. How would it be possible that we erode their market share and build a sufficient moat around ourselves so they cannot crush us with their size?

1. Counter Positioning

When a new entrant (you) comes up with a superior business model which the incumbent cannot copy without hurting their profits. As a result, you absorb market share as you offer superior value, but your competitors is unable to compete as it would undermine their entire business model.

2. Cornered Resources

When a new entrant possesses a resource or capability that incumbents lack or cannot easily replicate. This can be intellectual property, specialized and highly technical knowledge etc. They dont know/have the product you sell, and cannot replicate it to deliver the same value.

3. Scale Economics

As your business grows and competitors scramble to copy your business model, you can create an moat through economies of scale. By presenting your offerings at a reduced price, you can accelerate market adoption by recontacting prior price sensitive leads, and price out competitors.

4. Switching Costs

Getting entreched in the customers operatios is crucial in keeping competitors away. If your customers get accustomed to your processes and builds a routine around it, they experience friction when they switch vendors or providers with different processes. By making it expensive to switch providers, your competitors cannot offer marginal improvements.

5. Network Economics

Network economics exists when the value of your service increases as more users join, making it progressively harder for competitors to replicate or displace you. It creates a powerful competitive moat. This can occur directly, where users benefit from the presence of other users, or indirectly where one group of users attracts another.

6. Process Power

As your business achieves scale, you can introduce internal processes in your marketing, operations, sales, recruitment that creates a moat around your business. Since your processes are not revealed to the outer world, your competitors will have to create their own processes to achieve the same results, creating a moat.

7. Branding

Customers face uncertainty when buying something new. The classic addage of "is this a scam?" When faced with this uncertainty, customers look for brands they trust as a means of evaluation. Therefore, the customers relationship with your brand is not something your competitors can easily replicate.

Rule: Create moats to protect yourself againts your competitors

Marketing Your Value

Having a great and attractive offer in 2026 is no longer enough, it needs to be backed with superior marketing and sales execution. Can you communciate the value of the features your products exemplify, and connect it with the monetary value in the terms of real dollars?

For example, a software company will find it fruitless to sell its "great features." Instead, what their sales process should focus on is how those features will directly contribute to lower cost or increase revenue. Especially when doing B2B, you need to have a sales document ready to present your offerings to prospects.

Additionally, do not be a dick. Use sales as an opportunity to meet new people, make new friends and business connections for the sake of the value of the relationship in itself. Not every approach will result in a sale, and nobody likes to deal with a person who is a whore for money.

Rule: Communicate your value, and preserve relationships long term

Positioning Your Product

The only job of marketing is getting your offer in front of your customer. For every niche, ensure that you have different offers that speaks to different pains. If you have done the steps prior to this, you should already know exactly what your target market need/want/hates.

What your customer needs is your core offering. It is all the features that a service or product requires to transact in any sale. By cutting down all the features down to the bare minimum for it to function, that becomes your most accessible offer to the market.

Next, what your customer wants is your menu upsell. Include a price tag for all that the target customer want but not need. Think of wants as your quality of life upgrades for your product offerings.

Hateful features are features that increases the price of the product for a feature the target market do not care about. This is why there is no such thing as a "generic offer" or a "one size fits all solution." Each niche has its own caterings of different painpoints (needs) and desires (wants).

Rule: How an offer is perceived and presented influences behaviour

Packaging Your Offer

The war between price, demand and deliverables is always a work of science:

1. You cannot cram too many deliverables as you will jack up your own prices by passing on your costs.
2. You cannot underprice for the value of your product because you will not unlock the full profit potential of your product
3. You cannot charge too low as you will make a loss or fail to deliver what you have promised to the customer

So, there is a sweet spot between just enough deliverables, at a price point which the market will accept and give you a healthy margin to grow your business aggressively while being able to overdeliver upon your promises when you need to make the customer happy.

It is to be said that 68% of all product launches fail. This includes new offerings created by existing incumbents, startups etc. With any new business idea, dont give up when things go wrong. Iterate, change your offers until you find product market fit.

Conclusion

In a nutshell we have discussed the general direction you should be thinking towards when you're starting a new venture:

1. By choosing the right target market for your offering
2. By conducting market reserach through real world outreach and curiosity
3. By thinking about how we can defend our buisness on the way up
4. By having dedication to be presistent in sales and outreach
5. By understanding positioning yourself into real world demand

Of course, you cannot expect it to look so neat and nice. You'll make plenty of mistakes along the way, and the rule I give myself is that I will give myself a 2 year timeline to make a business work. If it doesn't turn a profit by then, perhaps it is time to move unto greener pastures.

That's it for me. Best of luck. Please check out my other posts and practice everything holistically. Send me an email if you want a specific topic written. You can see "coaching" to see if I have room to onboard new students.

Cheers,
FriendlyWrenChilling.