America - and much of the world - is in the midst of a recession. Customers are only interested in purchasing items at the lowest price and the only way to thrive now is to slash prices to rock bottom. Right?
I don't agree. Granted, people have less money to spend than every before. But I don't think that the fact we're in a recession means price cuts are mandatory.
Yes, customers always want to pay the lowest price (or not pay at all) for generic products or services. However, this has been around for a while - it's not just a result of the financial crisis.
In my opinion, the price of a product or service only becomes a major issue when creativity is lacking.
The key to justifying a higher price is to provide something that is of more value.
Customers are always open to paying more for a product or service that is more than a bare bones approach.
Take Apple for example. Apple can charge a premium price because they don't just sell computers and music players, they sell a beautiful-looking machine that is easy for people to use and that has a huge "cool" factor.
But is being cool enough to sustain Apple in a time of financial crisis?
I'll let you decide. Keep in mind that Apple is one of the very few stores that didn't have a "we're-so-desperate-that-we're-practically-giving-stuff-away" sale after the holidays last year. And that people snatch up the new iPhones whenever they arrive. And the fact that the blogosphere is drooling over the mere possibility of an Apple Tablet computer.
The same goes for nearly any product or service. There's a difference in buying a cup of coffee versus buying a cup of coffee made from organically-grown beans that are grown by a farmer's collective in South America that uses their profits to lift their community out of poverty. The coffee could have the exact same taste - but people will pay more for the second cup.
Or take the infamous Michael Graves toilet bowl brush, "an understated, well-designed work of translucent matte plastic and white bristle bristle" that Daniel Pink wrote about in A Whole New Mind. A toilet brush functions exactly the same whether it's a $20 brush created by a designer or a $3 brush you buy at Ikea. Functionality isn't what makes people spend 6x the price of the regular toilet bowl brush - they're paying for the look.
If you can make your generic product or service special - by making it beautiful, or making it so easy to use my 90-year old grandmother could install it, or by showcasing the incredible story of how it came to be, or even by just having such a great customer service line that your customers know they can always depend on you - it won't be necessary to have the lowest price.
The key is to find innovative ways to make sure your customers feel like they are getting value for the extra money they're spending. And that takes creativity.