The Price of Exclusivity
You will not hear leaders of luxury brands, large or small, openly speak about this. However, it is a business reality that when you decide to have exclusive clientele, serve limited numbers, or produce limited quantities of your product, you must carefully define the economics of your business model. It is difficult and nearly impossible to build a business selling just a few. Large luxury brands count on favorable economics of each unit and selling many pieces of multiple products to make the business successful. In most cases, entrepreneurs selling just a few do not have a business at all, but a hobby or vanity venture.
Overhead associated with running a business makes focusing on limited editions and small numbers of clients prohibitive, unless your pricing (and everything else about your business) accounts for this narrow focus. Before you venture down this road, consider your goals. If you want to produce something high quality, whether it is a product or service, but offer to just a few, it will have to be priced high. If you are working alone, have limited costs, this may be sustainable if your goals are tied to your craft and not your pocketbook. However, you will have little room for error, and a misstep, can make your small business a charitable contribution to society. If you have rent, labor, production, travel, and borrowing costs, for example, few businesses will work selling limited quantities.
A better approach is to define what you will deliver, decide on the largest audience you want to support and double it. Make the product or service the highest quality so you can price it high. Don’t be afraid to be the most expensive. You need margin for profit and error. Then, consider alternate revenue streams related to what you deliver that you can count on to grow your business. Those revenue streams should be connected to additional services, product enhancements or replacements that can be provided to your exclusive clientele. Next, you must have the best marketing and sales operation in your category, offering both your core product and enhancements. You will need high levels of effective and systematic prospect and client engagement to move your brand and products forward and make the business work.
The thought of this is sometimes off-putting to luxury entrepreneurs. First, marketing and selling brings its own level of discomfort. Then, the idea of having large numbers of clients can sometimes be unattractive. That’s because the more clients, the more complexity added to the business and frankly the more likely you will have unappreciative clients, requests for refunds, or other challenges to your peace as a proprietor. I must say, that goes with the territory. If your business is working financially, being bigger is less stressful and you can have others support your clientele. Build your business for financial strength.
While the idea of a small company, with you at the helm, serving rich and demanding clients who love what you offer is romantic, the reality is more like, building a small enterprise, offering the very best, engineered to operate like a revenue and profit machine. You may find your add-on product, has better margins than your core product, like perishable, or consumable add-ons such as razor blades, lotions or anything that goes down the sink, where repeat business is built in. If you are not so fortunate to have clients deplete your product and need more, than you must give them more to enjoy, and to find necessary to have. And you must find it necessary to have more clients, at the start. The price of exclusivity is business expansion.
Write me at: info@andretaylor.com to get more tips on expanding your exclusive business.
At Taylor Insight we help premier and luxury businesses excel and grow by attracting, retaining, and growing with affluent clients. We provide exceptional strategic, marketing, sales, and service guidance, and a portfolio of high-impact learning programs.
