Seth Godin's latest post on Luxury vs. premium is relevant to goods and equally relevant to services, especially as we see them in the context of the consulting profession.
"Luxury goods are needlessly expensive. By needlessly, I mean that the price is not related to performance" – Admittedly I am small consulting company outfit, but have seem many a business deals go towards the big players (not to say that they are not competent, they are) just because the client prefers to have a big name on the cover of the report. It's not only the big ones, many small outfits price in a way that makes them look exclusive. Somehow paying extra (quite a bit extra) adds credibility.
"Premium goods, on the other hand, are expensive variants of commodity goods. Pay more, get more" – now this applies to both large and small consulting companies. The customer is looking for a good end product, i.e. companies need to focus on excellence – making sure that their products and services are top-notch. And then and only then, do you get to charge a premium for it.
So the lesson learned here is to focus on developing your services. Be a thought leader in your area of expertise. Work to build a reputation and focus on being Premium over Luxury.
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