Are your custom products really delivering the profits they should?
Unlocking the True Value of Custom Products: Why You're Losing Profit and How to Fix It
When businesses offer both standard and custom products, one thing becomes crystal clear almost 100% of the time—customized offerings tend to underperform in terms of profitability. Despite the immense value and expertise you deliver through customized solutions, these products are often priced similarly to standard ones, meaning you’re not getting paid for the amazing value you create.
This is a pattern we’ve consistently identified with our clients, and it all comes down to one key issue: process. The good news? We have the formula to fix this problem and ensure your custom products deliver the profit they deserve.
Custom Products vs. Standard Products: Why the Gap?
It’s no surprise that custom products provide significant value to your customers. They require specialized attention, unique engineering, or tailored services that your standard products don’t. Yet, when it comes to pricing, we’ve noticed that companies often overlook this added value, failing to capture the premium price their custom solutions warrant.
So, why are custom products frequently underpriced compared to their standard counterparts?
Lack of Pricing Discipline: Many companies do not have a structured process to determine custom product pricing. They often rely on instinct or historical pricing without accounting for the true cost of customization, including labor, time, and expertise.
Inconsistent Cost Tracking: The effort and resources required to develop custom solutions often go under the radar. The absence of a formal process to track these costs leads to a disconnect between the price charged and the value delivered.
Pressure to Compete: There’s a common fear that pricing custom products higher will drive customers away. However, this mindset can erode margins and undervalue the very thing that sets your business apart—your ability to tailor solutions to specific needs.
The Consequences: Lower Profits and Missed Opportunities
The result? Custom products are eating away at your margins. What should be your highest-value offering is instead contributing to profit leakage. If you’re not getting paid for the time, resources, and specialized knowledge that go into creating custom solutions, you’re leaving money on the table—money that could be reinvested in innovation or scaling your business.
Furthermore, by pricing custom solutions similarly to standard products, you’re diluting the perceived value of your customization services. Customers may come to expect lower prices, not fully understanding the time, effort, and expertise involved.
Why Process Is the Root Cause
From our experience working with businesses across industries, the key issue is a lack of a structured process. Without a disciplined approach to pricing, you’re left relying on gut instinct or external pressures, which ultimately leads to underpricing.
A clear, formal pricing process ensures that all the factors involved in customization—extra labor, specialized materials, longer lead times—are accounted for. This process empowers you to capture the true value of your custom offerings.
Our Formula to Fix the Problem
We’ve developed a proven formula that transforms how companies approach pricing for their custom products. Here’s how it works:
Comprehensive Cost Tracking: We work with you to develop systems that ensure all costs related to custom projects are tracked in detail. This includes labor hours, material variations, and specialized equipment use. Every resource you invest in delivering a custom solution should be accounted for.
Value-Based Pricing: Custom products require value-based pricing—a pricing model that reflects the premium customers are willing to pay for a tailored solution. We help you align your pricing with the real value you deliver, rather than using a cost-plus model or defaulting to standard product pricing.
Customer Education: Often, customers don’t fully understand the difference between a standard product and a custom solution. We help you develop a communication strategy that clearly explains the added value of customization. When customers understand what goes into delivering a custom product, they are more willing to pay the premium price.
Regular Pricing Reviews: Dynamic markets and evolving customer needs mean your pricing should be reviewed regularly. We implement processes that ensure your custom pricing is consistently aligned with both your costs and customer demand.
Results: Higher Profit Margins and Fair Value
Our clients who have adopted this formula consistently see a significant boost in profitability for their custom products. By creating a disciplined process around custom pricing, they’ve been able to confidently charge higher prices—without losing customers—because their customers clearly see the value they’re getting.
Moreover, businesses report stronger customer satisfaction as their clients better understand and appreciate the unique solutions they’re receiving. It’s a win-win: you earn the profits your custom work deserves, and your customers receive tailored solutions that truly meet their needs.
The Bottom Line: It's Time to Capture Your True Value
If you’re offering custom products but not seeing the corresponding profits, it’s time to take a hard look at your pricing process. The effort and value you put into customized solutions should be reflected in your bottom line. We have the expertise and the formula to help you make this shift, ensuring that you’re compensated fairly for the amazing value you create.
Don’t let your custom products fall short in profitability. Reach out to us today to learn how we can help you implement a structured, value-based pricing process that captures the true worth of your custom solutions.