This post was originally published November 29, 2023 on LinkedIn

Have you ever purchased a concert ticket to see the opening act, rather than the headliner? 

I have. And you know what? It was awesome. 

While you don't get as much time to sing along with the folks you want to see, you don't mind leaving the show a little early to beat traffic. It's a different experience than your standard concert, but it's a good one just the same. 

Creating a Different Experience through Your Profit Model

We know this is true, a competitive advantage requires looking beyond creating a unique product or brand. One of those pathways—our profit model—doesn't often get the spotlight in the differentiation arena, but today is its day to shine. 

Yep, the way we rake in the money can be a powerful source for competitive advantage. The magic lies in the details of our profit model - what we sell, our pricing and how we collect those dollars. Let’s get into it and see how we can use differentiation to turn our profit model into our star.

Six Ways Differentiation Shines in Profit Models

• Price: The Tag Matters. It's not just a number; it's a statement. Look at Yeti, who turned coolers into luxury items with their premium price point, completely upending a sleepy market. If competitors in our category are all clustered in a similar price range, then we can break free from the pack by introducing higher or lower priced offerings. 

• Pricing Model: The Art of the Deal. How customers pay can be as unique as how much they pay. Think Dollar Shave Club, flipping the script with subscription razors. Suddenly, buying blades became less chore and more charm. With the plethora of unique pricing models out there, who is to say that our category standard is the best at delivering value to our consumers? 

• Revenue Sources: The Portfolio Play. Amazon, anyone? They sell so many things that it’s part of their unique value proposition. How? One example is how they bundle offerings across their platforms. You may have subscribed to Prime for the free shipping but you may be keeping Prime for all the other perks. Our lesson from this: How can we use our various offerings to create a Swiss Army knife that consumers continue to buy even as their needs change?

• Payment Mechanisms: Beyond Cash and Cards. Starbucks isn't just about coffee and a third place; it's also about how we pay for it. Their app introduced two new ways that we can pay for their beverages and banana bread: a digital wallet and loyalty points. Cash and cards are mainstays but they don’t have to be the only method of payment. 

• Promotions: The Discount Dance. Promotions are a great way to deliver extra value quickly back to consumers. When done right, promotions can become a key point of differentiation for our business. Look at Kohl's, where discounts and Kohl's Cash aren't just offers; they're pillars of the shopping experience.

• Base Sales Unit: Rethink What You Sell. Remember when AT&T and Apple made us buy data instead of minutes with the iPhone? That was a game-changer. They didn't just sell a phone; they sold us a new way to think about—and buy—from our wireless carriers.

Transforming Your Profit Model into a Showstopper 

There you have it. Six ways to turn our profit model from a background player into the star of the show… or at least a really interesting character that makes people love our show even more. Whether it's through pricing, payment methods or the very essence of what we're selling, let’s stop overlooking the unique value we can create for our customers through these innovative and strategic approaches to our profit model.