Not all businesses are created equal. Some products and services are perceived as being more valuable than others. Usually the higher value accrues to the product or service that cannot be be built, produced or performed by the customer. For example, tax planning is generally regarded as requiring the experience, skill and professional tools available only to CPA's and tax attorneys whereas TurboTax can prepare a moderately complicated tax return for less than $50. Fifteen years ago both of these services were considered off limits to the layman. Today only one of them is considered the exclusive territory of degreed professionals.
Another example is the difference between a pool service company and a professional plumber. The pool service company provides convenience for a fee. If the homeowner is retired or has adequate free time it may not make sense to pay for convenience and a knowledge of pool chemicals. That knowledge can be acquired (possibly after the trial and error of recovering a green pool or two) and the time can be sacrificed. But a plumber is another matter. If one does not know how to detect a leak or how to acquire and use the tools to fix the leak no amount of time or trial and error will suffice to get the job done.
In your business you need to take a fresh look at your product or service through your customers' eyes. Is what you do something that your customer could do on their own with enough time or trial and error experience? If the answer is yes you will may face competition from the worst possible place, your customer. But that is not all. Competition will also come from other businesses who increasingly commoditize your product or service.
Ask yourself what features or modifications you can make so that there is little possibility of your customers being able to compete with you. The dry cleaner that is worried customers may start laundering their own shirts needs to find a way to make the service so convenient and worry free that leaving would be horribly inconvenient for the customer. Two ladies in my neighborhood have done this by creating a service that picks up the laundry every Thursday and delivers every Tuesday. I can't compete with that. Even if I wanted to do my own shirts there is no way I can match the convenience or time savings.
We have done this at Axiom by focusing on clients that desire strategic planning services instead of just tax returns. Sure they may be able to do the returns themselves eventually. Who knows what QuickBooks or some other software provider will innovate in the future. A day is probably coming where you can pay an extra $100 and have your accounting software prepare a business tax return for you. But can it help you put together a plan of attack and accountability to meet your 5 and 10 year goals? Probably not. That is something inherently suited to outside help. So we have invested heavily in it.
In the services world competition from your customer base can be just as fierce as it is from other businesses who do what you do. That is your fault. Build things that your customers value, but which they have no desire or ability to build themselves.