What is a commodity?
A commodity is defined as a product or resource that is traded primarily on the basis of price, and not on differences in quality or features. When a product or service becomes a commodity, the market price will fall to the marginal cost of the lowest cost volume producer.
What challenges must be overcome when selling commoditised products?
Many consider broadband and telephony to be commoditised products. The challenge most resellers have is how to add real-value and differentiate themselves, to retain existing customers and win new business.
Buy well
To compete with the price leader, companies need to buy well from their suppliers. To win business, resellers may have to accept lower margins. In these situations, it is useful to have higher margin products you can add, to help boost margins.
Leverage USPs
If products are commoditised, are you adding anything unique? Are these USPs valued by your customers? Good service is a given, however installation expertise may be USPs you can charge for.
