Consumers care about quality. From experiences to services to gear, for most consumers money spent on affordable, quality products is seen as money well spent.
As a business, it’s important to maintain a high degree of quality. At the same time, you need to operate with a healthy profit margin and ensure your target audience can afford the solutions you’re offering. The ability to maintain affordable prices, grow a company, and maintain quality is always a balancing act.
If you’re struggling to get your business to scale while maintaining top-shelf offerings in your core areas of business, here are five tips to help. Each is supported by real-life examples. Use them to help you re-evaluate every stage of your business operations and find the areas where you can make upgrades and adjustments that lower or maintain costs without compromising quality.
1. Challenge Industry Norms
Many business philosophies will preach that marking up products communicates a particular brand image — and there is a certain degree of truth to that. However, there are times when this is used as a license to essentially price gouge.
For example, a while ago, Time Magazine ran a story on how fat the markup was on designer sunglasses. The exposé revealed that shades produced by Luxottica, the Italian manufacturer behind major brands like Ray-Ban, Prada, and Chanel, were going for upwards of $300 a pair — even though they didn’t block the sun or hold up any better than a $100 pair. Similarly, this topic has made it to the forefront of topics discussed by retail and finance experts on social media.
On the other end of the spectrum were low-quality convenience store sunglasses that were appealing to consumers who didn’t want to risk breaking, scratching, or losing an expensive pair of glasses.
American-owned and operated sunglasses company Shady Rays knew there was a large, untapped market available in the middle of those two extremes if they could find the balance of quality and affordability. Their solution? Develop products backed by a craftsmanship warranty to communicate their quality, but price them significantly lower than designer frames to make them more accessible. Then, lure consumers away from the cheap convenience store options by providing a lost and broken replacement guarantee.
By rejecting both the extreme markups of foreign luxury brands and the rock-bottom quality of budget options, Shady Rays was able to carve out a lucrative middle ground. This approach not only meets consumer needs more effectively but also challenges the notion that high prices are always indicative of superior value.
Question to ask yourself: Are you trapped in your current price structure? How can you go outside of the box to access untapped markets?
2. Set Up Efficient Production
Production is a necessary part of any business. However, it can also be a quiet (and often unnecessary) drain on resources. The way you produce your products may help you maintain their quality, but that isn’t an excuse for investing in unnecessary costs without proper justification.
IKEA is an ideal example of how efficient production can lower costs while still maintaining the quality of the original product. The Swedish home furniture brand’s flatpack concept is particularly critical to the brand’s ongoing success.
Gillis Lundgren, a furniture designer and the fourth employee to ever work at the retailer, invented the idea of the flatpack when he couldn’t get a table into a vehicle to move it for a photo shoot. He suggested taking off the legs, which sparked the company’s eventual obsession with sleek, disassembled pieces of furniture.
IKEA is now famous for its flatpack approach to the furniture business. The small size of its products makes it easier to ship and allows customers to take them home in smaller vehicles. This may not reduce prices directly, but it allows customers to save on shipping and handling costs. Critically, once assembled, the products also maintain the same quality as if they had arrived already put together.
This approach to streamlining production without compromising on the quality of the product itself allowed IKEA to revolutionize its business process and even expand its market share in the process.
Question to ask yourself: Where can you improve your production while maintaining the core quality aspects of your brand’s offerings?
3. Streamline Supply Chains
It’s important for business owners to remember that production and supply chains are two separate things. The way you create a product and how you distribute it are closely connected in the business process, but they are distinctly different. Both require close attention when you’re trying to maintain affordability and quality.
On the one hand, there are the supply chains that you need to access the resources to create your products or services. You always want to check in on these regularly and ensure that you are getting high-quality materials at a good price point.
On the other hand, you also want to look at your distribution supply channels. Walmart has proved the value of efficient distribution supply chains through decades of revolutionary supply chain management. The retailer has effectively scaled its operations by building a system that clearly defines each type of inventory. Smart distribution models also make it easier to get the right products to the stores that need them. And, it can be done without holding up sales or reducing the quality of the shopping experience.
The result is an optimized supply chain and customers who can find everything they need at low prices. Over time, Walmart has also consistently incorporated technology and automation. These have empowered supply chain management personnel with the tools they need. This way, they can oversee the movement of incredible quantities of products. Not only that, they can also do so with detailed accuracy as they move across regions, nations, and the world.
Question to ask yourself: Where in your supply chain (either up or down) are areas that could benefit from greater efficiency?
4. Stay Minimalist When You Can
Minimalism is more than a cultural trend. It is also a great way for businesses to reduce operating costs and focus on the core value they offer to their customers.
Muji exemplifies the application of this minimalist approach to consumer products. The Japanese retailer doesn’t include logos or elaborate product designs. They also keep packaging at a minimum. This makes it easier to maintain the quality of the products themselves. And, they can do so while saving money on extracurricular branding and packaging costs.
The company’s art director, Kenya Hara, points out that Muji isn’t just exercising a trendy minimalistic approach to product design. It is using the simplicity of its products to fulfill its brand’s primary goal. And their specific goal is to improve how people live their lives.
Consumers are able to incorporate Muji products of all kinds into their homes. And, they can do so without needing to build around a brand’s signature color schemes or stand-out logos and labels. They can use the minimalistic design to blend products into their existing decor.
Question to ask yourself: How can you use minimalism to improve the affordability of top-shelf products by preserving core benefits and removing unnecessary bells and whistles?
5. Support Quality With Memberships and Subscriptions
Customer retention is a major way to keep your brand profitable over time. According to Saravana Kumar, founder and CEO of Kovai.co, retention in an industry like SaaS and software can cost four to five times as much as acquisition. The numbers are similarly dramatic in many other areas of business.
One of the most effective ways to retain customers is through memberships and subscriptions. These are loyalty-based customer retention strategies that seek to build long-term relationships with existing customers.
Memberships and subscriptions also allow you to improve affordability through discounts. Members can receive lower rates since you know they will continue to pay for your offerings over time.
There are obvious examples of memberships and subscriptions. Streaming services are one of these. Country clubs are another. However, the rise of unique brands like Dollar Shave Club has proven that you can apply the concept to many other industries where they aren’t traditionally used.
Podcasting, for instance, is an innovative area where subscriptions have recently risen to prominence. Podcasts are, on the surface, a free resource for audiences. But, those who invest in creating content have come to use memberships and subscriptions to generate income and make their investments worthwhile.
Even major publications like the New York Times use this strategy to drive subscriptions. This support comes from a core of consistent and invested audience members. It seeks to reward them for their investment by giving them access to exclusive content with additional value no one else can access.
Question to ask yourself: As you consider the products and services that you already offer, what are ways you can reward loyalty through subscription and membership programs?
Improving Affordability Without Compromising on Quality
Offering high-quality products and services is a great way to build a reputation as a brand. You don’t necessarily have to fall in line with your competition’s prices when you have a superior product, either. Nevertheless, if your products are priced out of what your target audience can afford, it can negatively impact your business.
As you grow, it’s important to balance your investment in quality with maintaining affordable prices for your customers. You can do this by testing ideas before scaling, improving production, streamlining supply chains, incorporating minimalism in non-core areas, and setting up membership and subscription options for loyal customers.
If you can use strategies like these to maintain a high-quality product that your target demographic can afford, you set your brand up for ongoing growth and long-term success.
