How Price and Perception Can Power You Profits
Here is yet another email I would like to share with you....
People don't always buy based on the lowest price, but they do like to feel they're getting a good deal. If your aim is to give your customers value for their money... then your asking PRICE should represent the VALUE customers place on your product or service. If the price asked for doesn't feel right, in relation to the value delivered, customers are not going to buy.
If the customer thinks that what you are offering them isn't worth much, then how can you ever hope to charge a high price?
You can't!
The key is to communicate the VALUE message. And you must communicate it so strongly that the price seems reasonable in relation to the product or service you're offering.
What really matters is your pricing policy and how you communicate price to your potential market. Should you offer a discount? Should you feature the price boldly? Should you introduce the price early in the offer? These are important questions because without realizing ...you may be educating your customers to give price their primary consideration. That may not be your intention, but like it or not, that's what often happens. The customer becomes price sensitive and then ...SURPRISE! SURPRISE! ... A competitorcomes along with an even lower price and you lose a customer.
PERCEPTION IS EVERYTHING
A case in point - A week or so ago, I was exploring a suburban shopping center when I decided to get a loaf of bread for lunch. As I walked along the street I came to a supermarket. Then across the road, I spotted a little bakery. So, off I trundled to the bakery, "A wholegrain loaf please." I had committed to buying the loaf just by walking in the door.
Price was not important in my buying decision, something else was. That 'something else' was perception. Your customers' perception of you can be more important than your price.
Why did I choose the little bakery over the supermarket - perception! I perceived that the quality would be better. But who's to say that the supermarket didn't have a product equally as good as, if not better than, the little bakery.
So could it be, that by focusing too much on price, we set up an expectation of a lack of quality in the customers mind? And could it be, that by focusing too much on price, we create the impression that our service might be suspect? Absolutely!
DOES IT FEEL RIGHT?
It doesn't matter what you charge. It is the customers' perception of your price that matters. If the customer thinks the price is too high in relation to the value delivered for the product or service, then they won't buy. If they think the price is too low, then again they might not buy - because, they may be suspicious of the quality in relation to the price. The price may not feel right.
A customer perception of what is a 'reasonable price' is more important than what you want to charge for your product or service. And the customer decides what's reasonable based on perceived value for money, not price. It's creating this perception of value that tells the customer the price is right. I'm a firm believer that, in the long term, it's always better to add perceived value to your product rather than reduce your prices.
Customers are smarter these days, have more disposable income and have more choice than ever before. The key to making the sale is to communicate VALUE! Do it so strongly... that the price seems reasonable in relation to the product or service you're offering.
Excellent article!!! Also, a well developed analogy! Everyone wants to feel good after making a purchase no matter what they buy. I believe it is encumbent upon investors to balance their price with the value of the experience in dealing with you. Ultimately it is this concept that creates the win-win situation that is vital in every deal. Buyer feels confident in purchase and investor profits from instilling that confidence! Again, excellent article!!!
Extremely helpful article. Makes a lot sense. It seems that everything I read from this guy has much substance and is to the point. I definitely think this is something every investor, including the gurus, should take in consideration. Thanks DaveREI.