Making a Commodity into Something that Isn’t

I’ve mentioned before the two basic methods for pricing a product. One method I’ve described as a “Bottom Up” approach. You total your costs (labor, materials, etc.), add a profit margin and come up with a price. You increase profit by lowering cost, not by increasing the price. Businesses use this strategy if they sell a product that is viewed as a commodity. Take gas, for example. The product is the same everywhere, says the consumer. I’ll just go to where the price is the cheapest. No one’s giving me a reason to pay more. Don’t we all check the prices when there are two gas stations across the street from each other?
‘Sounds like a tough way to make a living. Why not come up with a strategy to remove the commodity label from your product, thereby justifying a higher price? Magnatag Visible Systems has “thrived making highly specialized versions of an item that couldn’t be less special- the erasable whiteboard.” They sell “whiteboard systems tailored for hundreds of applications, from athletic scheduling to hospitals and mortgage brokers.” The boards are printed with “customized grids and graphics and come with equally specific supplies such as magnets, lettering, symbols and card holders.”
The Lesson: Removing the commodity label from your product can lead to higher pricing and improved profits.
Your Homework: Is there something about your product that can be changed to remove the commodity label? Maybe a client comment or suggestion that revealed a unique need?
(Source: “Taking the ‘Common’ out of Commodity”, Wall Street Journal, 6/26/07)