How to charge more for similar products and services

17 January 2018

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When was the last time you splurged on a luxury meal in a supermarket? Perhaps you opted for the ’28 Day Aged Aberdeen Angus Beef Wellington’ with the attractive sleeve and a shiny badge, followed by the ‘Extra-Creamy New York Cheesecake with Locally-Sourced Orchard Fruits’ and an equally attractive, unusually-shaped box. How did you know those choices would be any better than the cheaper alternatives in the somewhat bland packaging located just a row or two away? The answer is, you most probably didn’t.

Reading the visual signals

Unless you had the opportunity to sample every available option, the thing that made you opt for the more expensive option was not the actual value (i.e. how great it tastes), instead, you were influenced by its perceived value (how great you believe it is going to taste). Your primary motivation was to buy something high quality because you wanted a special treat. So, you opted for the ones in the fancy box, because they did a better job of communicating the perceived value of the contents.

Brand perception

The perception of value

The perception of value is incredibly important. It is the reason why you may regularly disregard the possibility of eating at a certain restaurant simply based on how it looks, without ever knowing how the food tastes. It is also the reason why you might have caught yourself looking in the window of a shop and saying “that looks a bit too expensive for me” and not even bothering to go inside to check out the goods. People make these kinds of snap decisions all the time, based on the highest individual values that apply to them at the time. If they are on a budget, they instantly will rule out many options because the perception of something being expensive is a turn-off. If they are looking for something premium, they will instantly rule out many options because the perceptions of low quality are a turn-off. This is regardless of what the ruled out options may have to offer – the perceptions they have, end up guiding the decisions.

Engage or not engage?

The simple fact is, the way something looks matters. Seriously, matters. Almost everybody is able to recognise the visual signals of value, regardless of whether they have any design training or not. No matter what business you are in it is critical that the perception of your business is in line with the expectations of the customers your business wants to attract. It doesn’t matter if you offer the best service in the market, or offer a comparable service to much bigger businesses. If you are unable to effectively communicate the perceived value of your service in a way that attracts top-end customers, they will choose to engage with other businesses where the perception of value is more clear.

Don’t be filtered out

‘But this isn’t fair…’ I can hear you cry, ‘…surely, the service with the best actual value should get the rewards?’. Sadly, the businesses with the greatest solutions do not always rise to the top. If customers were able to objectively sample every available option in the market then maybe this would be the case. Unfortunately, nobody has the time to do that. Instead, the overwhelming amount of options forces us to filter our selections. The filtering process involves using our senses to evaluate the options. In a world increasingly dominated by the internet, that filtering is a largely visual experience.

Shifting perceptions to attract better customers

If you want to attract better customers willing to pay a premium for a superior solution, the best way to achieve that is to shift the perceptions of your business by changing the way it communicates with the outside world – its ‘brand’. A great website, a great logo, a great brochure, great environments, great signage, great sales and marketing material and a strong, clear value proposition are all essential components of a brand and each one can play an integral role in engaging your perfect customer. Once you start attracting the right type of customer, you might just find that brilliant things start to happen to your business.

Pitch website

Brand establishes market value

The power of this can be clearly demonstrated in a case study for one of our customers, Pitch Tents. By crafting a unique brand identity with a unique website that carefully positioned them at the higher end of the market, they are able to charge up to 66% more than some of their competitors offering. Yes, Pitch must deliver a great service (which we can happily testify they do!), because you can’t build a sustainable business by selling value that does not exist. However, it is important to realise that Pitch’s ability to charge a higher price exists solely because their brand attracts the type of customers who are willing to pay more for a perceived higher quality solution. In other words, the quality of their brand establishes their higher market value, so customers feel they are getting good value-for-money even if that comes at a higher price.

Working perceptions to your advantage

The benefits experienced by Pitch are exactly the same forces that cause you to opt for the nice looking box when looking for a treat in the supermarket, instead of settling for that rather plain looking alternative. So, remember – when it comes to establishing the value of your business, understand that perception is everything. Maybe it’s time you shifted those perceptions to your advantage.

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