Race to the bottom or race to the top

If you have a product or service that you’re trying to sell, you can go one of two places:

You can race to the bottom, and always be a few cents cheaper than your competition.

Or, you can choose to race to the top and always be working to make your product and experience better than it was yesterday.

Commodities

The pushback that I often hear on this is “that’s great, but my product is a commodity and price is the only difference”. That might be how you see it, but that isn’t how it needs to be.

• You can make a cup of coffee for a few cents, but millions pay Starbucks $5 each for them.
• You can have a glass of water for essentially nothing, yet nearly 500 billion bottles are sold each year for hundreds of times more than it would cost you at home.

Coffee and water are commodities until they’re not.

Funeral Homes

I was listening to a show a few years ago where a funeral home director was lamenting that his business was too commoditized and his only option was to compete on price. The host then brought up a hypothetical situation of Disney joining the funeral home business. What would happen then?