How can I differentiate my product against competitors if potential customers view it as a commodity, without having to lower pricing?

As Seth Godin once said "If all your customers care about is price, its probably because you haven't given them anything else to care about!"
Get those numbers on bad handling, shipping delays, lost packages and differentiate yourself from your competitors!
Repackage what it is you do, in the way that Orica stopped selling explosives and started selling a rock removal service.
I don't know how many "shipping lanes" you have: if you have many, surely the level of competition differs. Make your money where there is less competition and be competitive where there is more competition. Look at your T&C's as well - can you make them more attractive to help differentiate yourself, or better align them with your clients business model?
Hope that helps - happy to chat and discuss further

Branding. Present yourself as the glossier, clearer-spoken, upscale, trusted option.

I'd emphasize 4 aspects:

(1) Brand Name / Domain
(2) Written Copy
(3) Visuals (website graphic design, print media)
(4) UX / UI (website layout / functionality, mobile app)

I can help with the first two.

You may think this is all voodoo. But, in practice, most people don't really shop around to check each and every price tag. We're not that thorough. Midway through, we settle on something that seems fair-priced and trustworthy.

Which company do we choose? A brand we recognize or which seems reputable. How can we tell? Name. Pictures. Text. It's a snap judgment. We care about our time. We want to avoid risk. Provided the price isn't egregious, we go with the 1 that appears like a safe bet.

Don't know what domain name your website is using. If an upgrade or rebrand makes sense, then we can it over.

Also, if the written copy on your landing page, in ads, or brochures is weak, then we might take a look at it.

Yes, buyers do this. Make a spreadsheet--mental or written--with the vendors across the top. Features down the side. Prices along the bottom.

Line 'em up, reduce them to equal, and make it all about price.

They have professional Buyer courses teaching them how to do this and outwit Sales & Marketing, too!

So you have to add something.

It can be tangible or intangible.

Tangible is "Every delivery comes with a free bouquet of flowers."

Intangible is "We'll get it there on time--no matter what," and you develop the reputation for doing so through stories. An attitude. Commercials of your gritted-teeth courier delivering to an isolated, snowy mountaintop Buddhist monastery they had to free climb to reach.

The target market has to value this differentiating factor, and when it's done right a real monkey wrench can be thrown into their spreadsheet price-shopping plans.

Want my help in developing this differentiation in your buyers' minds? Let's book a call.

I LOVE YOUR QUESTION!
Gets the brain juices flowing!
Ok, so first off you are completely right! There is no reason why you should bleed out your margins trying to play that ignorant game. Large companies can afford it because for them is all about volume right, but at the same time you know that not everyone values price above all else otherwise you wouldn't be asking this.

First off - learn about Blue Ocean (I find myself saying that a lot lately) Blue Ocean is not common because is a high level methodology that most so called "growth/business experts" have probably never heard of and much less most companies. You would be surprised. Anyway, learn about it...you might grasp it right away but it will motivate you realizing that it is very very possible.
Second customer service alone won't cut it, but it is definitely a start. My suggestion is look for areas that are lacking involvement, could be a market or industry that most think worthless, remove feature services of your base service list - cutting you costs but not necessarily something that a client would notice and want a discount on. Think hard... this is how you achieve blue ocean.
Blue Ocean is the idea that because is so darn easy to compete on price for commodity products that everyone does it and it becomes traditionally a zero sum game with everyone bleeding each other out in the ocean of an industry and market... where blue ocean comes only after you have figured out what others havent and expand the existing market size by adding previously non-customers to now potential customer and you essentially owning that extra carved market share... you move to the clear blue ocean... sounds like a fairy tale but is very much in practice by many.. I recently did that with a cleaning company.

I can help you figure this out, but it is a long process.
Best of luck and if at least..keep me posted on what you do :)

This is a fantastic question! I love it! I have had similiar experiences. The most important thing is NOT to sell off of just rate. This is because then you submit yourself to economic contraction or expansion. Your income will be unpredictable. The ANSWER: Sales Training. We as sales owners have to find the "PAIN POINTS." Sounds like you have done a fantastic job doing that. NOW, you need to sell it or be sold. EVERY product and business I have had has ALWAYS been higher then competition and never has stopped me from thriving. Sales is vital, you need a team of sales folks hitting the phones, door knocking, marketing, offering so much value that you are no longer competing, but you are dominating. I"m doing this NOW in my business!

There is only one thing to do. Differentiate your business or yourself. What is different about what you sell or do?
You have to have a USP. That can involve your business or the people who work there. There are 100's of ways to differentiate your business and to develop an USP.

I am not trying to sell you on calling me. Really, I am pretty busy with my businesses and consulting. However, I need more info before I could have a greater impact in helping you.

Ask, Ask, Ask, then Ask again.

Bonus:
Here is $10,000 worth of information for free and in a nutshell.

Concentrate on the 3 M's. There are actually 7, but 3 will do for now. These are Market, Message, and Media. They come in that order.

Who is your target market (customer, clients, buyers, users, etc.)?
Tailor your laser focused message for this target market.
What is the best media mix to get your message to that market?

Here's what you do...first, make it an offer that is so incredible that they cannot resist. Secondly, do all the work for them. Make it so easy to make the purchase now that they can do it virtually without effort. Thirdly, give them an incentive to act right now. Fourthly, offer an almost unbelievable guarantee. Fifth, offer a bonus for acting now. There are many other incredible steps, but these steps should help the novice to the professional sell anything.

Whether you are selling B2B or B2C, you have to focus on selling to only one person. You can actually sell to one person at a time while selling to millions at a time. They are one and the same. Don't get off track, what we call digital marketing selling is just selling in print. And that has not changed since Cluade Hopkins wrote "Scientific Advertising." Really long before he wrote the book.

The secret to success: I have had the pleasure of knowing and working with some of the biggest names in business, celebrities, actors, entrepreneurs, business people, and companies from startup to billion dollar operations. The number one reason for their success is doing what they know and love while doing it in new, creative, and innovative ways.

Ask, Ask, Ask. Have thick skin and learn from each "mistake." In a short while, the market will tell you what you need to do and who and what you need to ask. But get started now even if that just means asking a contact on LinkedIn.

While you are thinking, think big and think of something at least 1% better, newer, or different. And being cheaper is not a winning strategy.

Make decisions quickly and change decisions slowly..unless you are actually going off a cliff.

Remember these two 11 letter words...persistence and consistency. They are two of the most important tools ever invented.

Treat everybody you talk to and everybody you meet (including yourself) like each is your number one million dollar customer.

Bootstrap when possible and reasonable. Read "How To Get Rich" by Felix Dennis. Or better yet just remember the camel's nose in the tent story.

However, sometimes you just need to make a deal.

Listen, in any business you have to take some chances and some risks. Make sure you don't need a license and go for it. Remember, timid business people have skinny kids. Paraphrased from Zig Ziglar.

Best of luck,
Take massive action and never give up.
Michael

Michael Irvin, MBA, RN

You need to build value with your product and services for your customer.

According to Builtvisible, there are nine factors to consider when determining the value your product or service provides your customers:

*Product function: What will your product or service do for your customer? What effect will it have on their life?
*Points of differentiation: What is your product’s unique selling point? What sets it apart from similar products on the market?
*Quality: Is your product durable? Is it made to last? Will the services you provide continue to benefit your customers over time?
*Service: What “extras” do you provide your customers once they’ve paid for your product or service?
*Marketing: Have you created a “buzz” around your product or service? Are the benefits of your product well-known?
*Branding: Is your brand a true representation of the level of quality you provide, and of the values your company stands for?
*Customers’ existing relationship with your company: What have your customers’ experiences been when interacting with your company in the past
*Personal bias from experience: Unrelated to your company specifically, what does your target customer think about the product you offer?
*Price: How much do you sell your product or service for? *How does the price of your product compare to that competing companies’?

You can get more tips on building value (without lowering prices) in this blog: http://www.fieldboom.com/blog/customer-value/.