If you’re like most small business owners, you spend a bunch of time sweating over how you’re going to price your products and services.
Is the price you want to charge too high, and no one will say “yes”?
Is it too low, and you won’t be able to make a living?
While you’re sweating and guessing, your prospects are weighing something about your services way more important to them than price.
Perceived value.
Think of this like a teeter totter. Price on one side and perceived value on the other.
And it’s perceived value that’s got its weighty butt on the ground.
Sure, your pricing is important. But perceived value overcomes price every day. That’s why you’re probably not driving the least expensive automobile on the market.
Perceived value.
And you have a choice…let your prospects determine the value they place on working with you…
…or figure out what they want and share it yourself.
Easy so far.
Here’s where it gets a little tricky.
What do your prospects value, and is it the same from client-to-client? Your job is to manage value. How can you manage value if you’re not sure what your potential customer values?
Sometimes your value rests in functional attributes; like, you save them time to do other things, or you’re taking away a vexing speed bump holding them back.
Sometimes your value is more emotional; like, you reduce anxiety or boost confidence.
Now that you’re thinking about the value of your services, you can probably name several elements. Tried and true deliverables. But perceived value can change as your prospects’ needs alter, based on business or personal conditions.
How do you identify new concepts your prospects consider valuable?
Thankfully, I stumbled on a study done by Bain and Company Inc. They have broken down value into 30 elements, rising in a hierarchy.
Now you have a tool to “hunt” for your perceived value.
As you look at this pyramid, think like your customer; not like the owner of the business.
Perhaps several elements contribute to your value. Perhaps you need to move further up the pyramid to “speak” more clearly and directly to your prospects. Perhaps there’s “new” value you must deliver as your market ebbs and flows, due to shifts in your customers’ wants and needs.
When you nail down the perceived value your prospects covet, your business will become distinctive…different from all your competitors.
You’ll speak more directly to your prospects, discussing the things that are really, really important to them.
And you’ll certainly make more money and do it more easily. Using the pyramid, you might even find it life-changing!
Go forth and do great things,
