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Value-pricing Strategy: Were not The Cheapest but...
In this highly competitive online marketplace, it can be difficult to persuade customers to buy from you when you offer a similar product to your opposition but with a higher price tag. And trying to beat competitors on price alone is a cut-throat business, very risky and not recommended. It attracts bargain hunters ready to defect to competitors for a better deal. Using a value-pricing strategy is a better proposition because it attracts loyal customers. Why do customers buy designer-labelled clothes and luxury cars? Why are those items more expensive when they don't cost so much more to make? The answer lies in the perceived value. Value is not an inherent attribute of the product but it commands a higher price. Customers do not buy features and benefits, they buy VALUE. Value is subjective. Value is a benefit but a benefit is not necessarily of value to all customers. For example, a vendor offers free installation and free updates for his software. Customer-A considers "free installation" as "value"' because he has no technical knowledge and this will save him time and effort. Customer-B rates the free installation as "nice to have" but the drawcard or "value" is the free updates that will save him money in the long run. Customers do not assign value to the same benefits. Behind value-pricing strategies there are a few important concepts:
When customers evaluate competing products, they are usually comparing value. To increase the value of your products, you can either add benefits or reduce the perceived risk factors rather than resorting to reducing your price.
Adding benefits
Reducing perceived risks
Naturally, everyone loves value for money but does not necessarily want the cheapest option. What value do customers perceive in your product and how much are they willing to pay? Value comes at a price! Next time you consider reducing your selling price, think value. © 2005 Henriette Martel-Lawson Henriette Martel-Lawson, author of "200 Marketing Ideas for Your Website", is a website strategist who helps businesses develop or convert a stale website into an effective marketing tool. Henriette is the founder of Marketing Cues, an internet marketing resource centre providing articles, reviews, free tools and lots of tips. Receive a free ebook when you subscribe to bimonthly WEBmarketingcues newsletter at http://www.marketingcues.com
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