I watched a really awesome interview recently that taught me an important business lesson I’ll never forget.
The interview was with a man named Palmer Luckey.
If you don’t know, he was the original founder of Oculus, the company that created the Oculus Quest VR headset (which was then acquired by Meta and is now called the Meta Quest).
In his interview with Peter Diamandis, he talks about Meta’s approach to VR/AR headsets versus Apple’s approach with the Vision Pro.
(Btw, I shared a new YouTube video this week with my thoughts on the Vision Pro if you’re interested)
Luckey shares the difference between the two companies’ strategies, and why he believes that Apple will win.
Here are the two strategies:
Meta: make the headset as cheap as possible, and then make it better over time.
Apple: make the headset as good as possible, and then make it cheaper over time.
See, the Meta quest retails at just $500, while the Vision Pro starts at $3500.
A lot of people have tried to criticize Apple for this price point… but they know exactly what they’re doing.
Instead of trying to make the device cheap (and crippling it in the process trying to keep costs down)…
They chose to jam pack every available technology today into their device and make it the best mixed reality headset ever seen.
But at the expense of a higher price.
In other words…
They chose to create demand for their product by making it good. Not by making it cheap.
Free isn’t cheap enough
There are two ways to create more demand for a product: making it cheaper, or making it better.
A mistake I see so many entrepreneurs make is only focusing on the first option: trying to create demand for their products and services by lowering their prices.
When you’re just starting out, it might even feel like this is the only option.
But in reality all it does is force you to the bottom of the market, all the while producing a low quality product in return, because you can’t afford to make it any better.
At the end of the day, it doesn’t matter what low price you give your product.
If it’s not good, nobody’s going to want it.
As Luckey says so eloquently in the interview, “Free isn’t cheap enough.”
What he meant by that is, even if your product is free, if it isn’t good, you’re going to struggle to get it off the shelf.
The Apple Way
I’ve always been inspired by big companies like Apple and their marketing and product strategies.
When I was a full time freelance filmmaker, I adopted a philosophy that I believe was the reason my business grew so fast, while other filmmakers seemed to struggle.
I made a rule for myself early on that I would always produce the highest quality work I could, at whatever the cost.
Even if it meant losing a client because my quote was too high, I was willing to make that sacrifice in order to maintain the highest standard of work.
It meant I got a lot less work at first, but ultimately it made me grow way faster than my competitors.
This is the Apple Way: focus on the quality of the product first, and charge whatever you have to to get there.
And then through iteration and optimization, make it more affordable over time (while maintaining the high quality).
That way you create demand for your products because they’re actually good and people want them, even if they’re cost prohibitive at first.
But then when you come down market with the price, the demand explodes.
Starting at the top
It’s not just Apple that follows this approach, by the way. Many of the biggest companies in the world do the same thing.
For example, look at Tesla.
It didn’t start out by making the relatively low-cost Model 3 (or the even cheaper vehicle coming next year).
Tesla’s first vehicle was the Roadster, which started well north of six figures for the car.
There have been many companies over decades that have tried to make electric vehicles mainstream.
But they all failed because they took the Meta approach, and all we ever got were worse-performing vehicles that people referred to as “glorified golf carts”.
When Tesla came along and finally focused on product first (even at a high cost), EVs became mainstream and Tesla became one of the most valuable companies in the world in under a decade.
Product first
Whether you run an agency, a software company, or sell online courses and programs, this same principle applies to you too.
Remember the phrase, “Free isn’t cheap enough.”
If you’re struggling to get sales or find clients, instead of dropping your prices, focus on making your product better.
Talk to your target clients, find out what’s missing, ask them what they’re looking for.
When you focus your attention on building a high quality product or offer with a perfect product-market fit…
You’ll find the demand for your business skyrockets, at whatever price you choose to charge for it.
