People often confuse value with price. They aren’t the same. Though what is the difference between the two and why does it matter? Don’t they always go together? Not necessarily.
One of the first questions people often ask when they want to purchase something is “How much does it cost?” And, that’s only after we’ve turned the object over and over looking for the price tag.
In today’s economy, the concept of value and price has gotten trapped together. They are not synonymous. You may wonder why some people are still buying expensive items when others are counting their dollars and not spending much at all. The answer might lead to the truth about value and price.
Price is just that – a dollar amount assigned to an item or service. It usually reflects the going rate locally or globally. As a business owner, you want to stay competitive without alienating your target customer base. It’s a matter of profit as well. If you come in too low, then you are undercutting your own business and you will lose money. Underearning is a real concern, and can put your business into jeopardy.
Value refers to the significance that we apply to a good or service. It is tied into the perception of your business brand. Toyota, for instance, has built a reputation as a solidly made car. As such, people will invest more in one because it will keep their families safe and they can drive it for a long time. The decision, to buy, moves beyond mere price to what is perceived as the additional benefit that comes along with purchasing this kind of car.
As you work to present your products and/or services to the customer, consider how you will translate the value of your brand as well as the price. Time and time again, business owners who reach their customers on a more personal level with their marketing strategies are delivering value along with their price. If a customer feels they must have your product or service, for whatever reason, they will buy and continue to buy despite an economic downturn.
So, how do you do that? Look at your products and ask yourself a few questions. What can they do for your clients that others can’t? Besides the physical product or service outcome, what are you also offering your clients that they can’t see?
Here’s an example. If your product is organic, it probably costs more, but what are the benefits of that? There are no pesticides used which pollute the land and are dangerous to humans. Families can confidently feed their children without worrying about artificial ingredients. You are promoting healthier children as well as a healthier environment as a bonus.
All of these are ‘hidden values’ which are additional benefits you offer.
So is price or value more important? They are not the same, but communicating the value of your products to customers can keep them buying even if the price is higher than the competition.
Loyalty may run deeper when you build your brand on value rather than just price.