8 min read(Last Updated On: November 23, 2017)

This morning I bought a vanilla slice from Aldi’s bakery for 39 pence. And this afternoon, I bought ‘essentially’ the same thing for £2 from an independent baker. One seller was able to charge 5+ times more than the other, and – more importantly – I was happy to pay that.

How to charge more than your competitors is easier in theory than those who don’t grasp the secret sauce (which I’m about to spill) may believe.

Fundamentally, the second seller did only one thing differently, and that one thing enables them to charge premium. A second indirect thing they did ensures that they thrive whilst charging premium for any of their products, not just the one I bought.

In this post, I will talk about what it is that they did for me to open up my wallet nice and wide, which some outspoken acquaintances of mine claim is a rare occurrence, and I will also talk about that ‘other thing’ they did that positions them so strongly and supports their outrageous pricing.

Let’s start with the cheaper product. Let’s agree on the fact that, when it comes to vanilla slices, Aldi is clearly targeting the lower end of the market, whilst the second baker is targeting the top end of the same market.

In other words, if you want to know how to charge more than your competitors don’t do what Aldi does. But if you want to make a ton of money, do what Aldi does… Ha!

That throws a spanner in the works, uh? Charging more than your competitors is not always necessarily the best strategy to make money. But yeah, OK, to mimic Aldi you need seriously deep pockets and access to uber cheap wholesale pricing. So forgive the digression and let’s get back on topic:

How to Charge More Than Your Competitors

OK. Let’s think of the market as a bunch of people who are of the sweet tooth disposition.

In the lower end of the market, there is a second competitor from whom I also sometimes get my vanilla slice fix: Tesco. Tesco sell the same vanilla slice as Aldi for about 80 pence and whilst each supermarket may argue that their product is different because of x, y and z, I, as the consumer, don’t care. To me, they both look, feel and taste the same. If anything, Aldi’s product taste’s better because I tend to catch it as it’s coming out of the oven (not literally of course: they won’t let me into the bakery…)

Again, Tesco’s reps may complain that it’s not a like-for-like comparison, and Aldi’s reps may scream at me for saying that (to me) both products look, feel and taste the same… but I don’t care. I’m the consumer and since I’m buying, it’s up to them to educate me on their products. I don’t see a small label listing benefits or differentiators next to their products… so I will call them as I see it.

Thus, whenever I have the choice between Aldi and Tesco, I get my vanilla slice from Aldi, because it’s cheaper and because as far as I’m concerned I’m paying for the same product.

Fast forward to this afternoon. I found myself in St John’s Wood, a nice district of Northwest London, staring at a tray of delicious looking pasties. They look like vanilla slices, but better, and since I’m a fan of the old vanilla slice, I just had to have one.

The key word here is ‘better’. The presentation is perfect. These look superior to my usual vanilla slice so I logically explained my buying impulse as a well-deserved treat. Pricing didn’t even come into it. Price doesn’t come into it when you buy a Lambo: you’re paying more to get better. This was the same, only I wasn’t planning to sit on my vanilla slice once I got my hands on it.

So Why Did I Pay 5x More and How Can You Apply This to Your Products or Services?

In one word: positioning. The independent baker has positioned itself as a premium seller by creating pastries that look slightly more sophisticated than the average ones I see elsewhere.

They look hand-made, actually.

You can use this same approach if you want to sell premium: make your products or services a tad better than the competition. They don’t have to be significantly better (although that would be a tremendous help, of course). A small percentage improvement can give you the edge you need. Just make sure it’s not something everybody can replicate overnight in order to catch up with you and ruin your positioning.

For example, if you’re selling on Amazon, sourcing a leather phone case and slapping your logo on it is not going to be a great differentiator – you’re going to look the same as everybody else, and the only real differentiator is going to be the very worst thing you could hope for: price.

This is a recipe for recreating the Aldi v Tesco vanilla slice scenario: when the product is – or it’s perceived as – the same, the cheapest one wins. The only exception is where you buy a product based on availability (remember: I sometimes get my vanilla slice from Tesco, simply because it may the only one available at the time).

If on the other hand, you source a leather phone case that has some inner-padding that makes it shock-proof, you have a real differentiator and that enables you to step out of the price war.

What is ‘The Thing’ That Ensures You Thrive Selling Premium?

The second ‘indirect’ thing the independent baker did, is to choose the right location. Selling premium in a marketplace saturated with cheaper sellers is going to take away some of your profit, despite the cheaper products being of lesser quality. That’s just how it goes. If the premium baker was located between Aldi and Tesco, the market would have easy and quick access to cheaper choices, and only a segment of that market may choose to go premium.

Put simply: if you’re selling hot dogs for £2, don’t stand next to the seller that is selling them for £1. Find a different corner where there is no access to the cheaper alternative.Click To Tweet

A real example that most train travellers are grudgingly aware of is the fact that you can pick up a small bottle of water from a supermarket for as little as 19 pence, but when you’re waiting for a train, the little shop on the platform sells the same bottle of water – and everything else – for a scandalous amount. They should be wearing masks, the robbing b*@%!**s.

The independent baker chose a great location: a stretch of road in an affluent area where price resistance is lower and where there is no access to cheaper alternatives.

Positioning + Location = Success

About Today’s Consumer, The Fake Vanilla Slice And What it Means to You And Your Products And Services

I bought the premium pastry from the independent baker because it looks like a vanilla slice. However, it wasn’t. It was a Parisian Custard.

This is the bit where Aldi and Tesco reps (if they’re still reading) get on their high horses and start drilling me about the fact that I can’t compare vanilla slices with Parisian custards. But that would be missing the point, because like it or not, I’m the consumer, and it’s up to them to educate me on the features and benefits of their products.

To the connoisseur of the Parisian Custard, if there is such a thing, this may be a mute point, but to those of us who didn’t know what one of those was up until this afternoon, it means one thing:


Crass, I know, but there it is.

And here’s what it means to you: if you’re selling triple-A double glazing and you don’t tell your market what it is and what the difference is, your market just sees THICK GLASS. If you’re not prepared to educate your market on your points of difference, then be prepared to lose out to cheaper competitors, even if their products are not exactly the same as yours, because as far as the market is concerned, they are buying essentially the same thing.

Price Your Products Higher for More Profit

If you want to go Premium, then look at your products or services and think about how to charge more than your competitors by positioning them better. Give people the excuse they need in order to justify to themselves paying you more.

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