Ethan Williams explains how a specific mindset kills margins, debunks myths of commoditization, and identifies opportunities to differentiate.
If you think your product or service is a “commodity,” you’ve already lost the pricing battle before it begins—the only actual commodities in our economy trade on exchanges. As you’ll read below, in the case of coffee beans (traded on an exchange), there’s still an opportunity to differentiate on the downstream experience. To call anything else a “commodity” is a failure of imagination and strategy. Here’s how to break free from commodity thinking and capture more value through more innovative pricing.
The Myth of Commoditization
When I hear someone say, “But I sell a commodity,” I hear, “I’ve stopped trying.” This is a dangerous excuse, disguising a lack of innovation, creativity, or courage to challenge the status quo. In today’s market, very few things qualify as pure commodities.
Let’s Debunk Some “Commodity” Myths:
Myth #1: Electricity is a Commodity. Electrons may be indistinguishable, but the customer experience, reliability, billing transparency, and green-energy certifications turn electricity from a commodity into a premium offering. Texas’s recent energy crises proved that customers willingly pay more for reliability and stability. Green and renewable options demonstrate clear differentiation—proving that electrons aren’t just electrons when branding and values enter the equation.
Myth #2: Web Hosting is a Commodity. When AWS commoditized cloud computing, the standard narrative was that pricing power evaporated. Yet platforms like Netlify and Vercel thrive by focusing on seamless developer experiences, unique integrations, and tailored workflows. They’ve identified user needs and built specialized features that command a premium.
Myth #3: Coffee Beans are a Commodity. Coffee beans trade on commodity exchanges, but brands like Starbucks don’t sell coffee—they sell an experience, a moment in your day. Specialty roasters differentiate through origin stories, ethical sourcing, and innovative roasting methods. The product itself barely changes, but the perceived value multiplies.
Key points include:
- Finding Your Differentiation
- Logistics and delivery
- Education and expertise
Read the full article, The “Commodity” Mindset Is Killing Your Margins—Here’s How to Escape, on FractonalPricingAdvisors.com.