First, it helps to define what I mean by “Price” and “Value”. Dictionary.com tells us “Price is the sum or amount of money or its equivalent for which anything is bought, sold, or offered for sale.” and that “Value is the perception of relative worth, merit, or importance.”
Price is a straightforward concept and potential customers will either pay or not pay for an item or service. Value, on the other hand, is a little more elusive. It is based on the customer’s perceptions. Not just their perception of the quality of the item or service, but their perception of what that item or service will do for them.
When a potential customer says, “I can’t afford it” in regards to a product they are saying one of two things. In one case, they do not have enough money to afford what is offered (price). In the other, they cannot justify the purchase because they do not perceive the benefit of what is offered (value).
Pricing can be negotiated, depending on your margins, to entice a potential customer to purchase a product. Value is more difficult to gauge. It becomes important to find out what your customer wants, not just what they need. You may have for sale the exact thing a person needs; you have it priced competitively, but still customers are reluctant to make the purchase. What is the perception of your product? More importantly, how can you find out?
Questions are helpful. Ask yourself first things like:
- Is this product easy to use/ install/ put together?
- Is my customer supported after the purchase?
- Is my product customizable?
I guarantee you; your customers are asking themselves:
- How easy is this to use?
- What happens if I have a problem?
- Does it come in blue?
Answering these questions in the affirmative increases the value of your product. Your customer perceives the product to be worth more because of their cost in time and/or effort to utilize the product is offset somewhat.
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