Amongst the many challenges faced by businesses, is the ability to build a strong bargaining power. This is even more challenging for the start-ups that meet with some established companies. The “you are a new company” argument is a hard one to tackle during a bargain of the price. Startups need to accept that this is the way the market works and the game is to level up the bargaining power.

Meanwhile, how can the startups work to convince their clients to pay the price quoted – without bargaining to a lower point? “Create a good value proposition”, says Dr T Chandroo, Chairman/CEO for Modern Montessori International Group, during a courtesy meeting with him on 13th April 2016. He shared about the need for startups to emphasize on the value that they are creating for the customer. “I must be convinced to pay the price quoted”, he said.

I have spoken to some of my friends and contacts, who have just started their business. Their problem is indeed the conveying of a good value proposition to potential clients. In the anxiety to secure the deal, so that their cash flow is maintained, they capitulate to bargains. I often see many promising start ups lower their price to a point that deters growth. Such situations can be circumvented if they spend some time to think through their value proposition.

A value proposition is not a slogan or a marketing statement that says you are one of a kind or that you are the best. From a customer’s point of view, these do not present a value to them. Based on my conversation with Dr Chandroo, I drew up three questions that start up owners can ask themselves, in order to derive a good value proposition.

  • How does your product or service solve a problem for the customer? Or, how will it improve their business?
  • What are the list of primary benefits as well as secondary benefits that customers gain when they purchase your product or subscribe to your services?
  • Why should customers buy from you instead of a competitor?

Contrary to the common believe, the value proposition is not a generic statement for your business. How your business creates value is subjective to target customers. Hence, do bear in mind that a good understanding of the target market is important to come up with a right fit of value proposition. It is also useful to run through your value proposition with your well-wishers and business mentors as well.