Simply put, perceived value pricing refers to the buyer’s perception of a product’s value and how much they are willing to pay for it. A customer’s opinion of your product is more important to them than your product is so knowing what your customer’s needs are will bring you a long way in understanding how to price your item or service.
Use a perceived value pricing technique in your marketing efforts when introducing your product to the market. Customers will relate with the value if they are given a list of positive points about your product and the more points there are the more value the customer associate with the price.
Don’t be afraid to give as much detail as you can. If a customer isn’t fully aware of everything they would get they are less likely to purchase. Don’t miss out on a chance to make a sale because you didn’t build up the value for your product. Which bring us to our next point.
Don’t price it too low. We’ve all heard the old adage, “you get what you pay for”; believe it or not there are customers that are willing to pay a little more for a more durable, long-lasting, enjoyable product that will make them feel like they got their money’s worth. Pricing a product too low can actually backfire because the perception will be that the product is cheaply made or doesn’t hold the value needed to spend their money.
Keep in mind real value, which is the costs associated with how much it takes to produce to the product and how it will benefit the customer, when setting a price point for your product. You will set yourself up for a financial fall if you place more value on your product than your customers do. Keep it reasonable. You may think the hours and detail put in are priceless but eventually you do have to put a price tag on it.
So just how do you set your value? Evaluate your position in your niche market and consider your customer’s perceived value. Don’t buy into the hype that you have to set your prices to compete with other companies. You’ll set your business apart by providing detailed product information and setting the value you want customers to perceive. They will follow your lead naturally but be careful to not hype up your product to being more than it is.
Be honest with your product and it will reflect through to your pricing.