Price Is a Calculation; Value Is a Feeling

Price is determined by an executive or a management team.  They understand how much a product or service costs to make or deliver, add a margin of profit and the result is the “price”.

Value is the feeling every customer and potential customer puts on the product or service provided.  Do not confuse value with price.

A very important point I took away from a presentation that Scott Stratten gave was; “there is no such thing as a neutral brand interaction, you either increase or decrease the perceived value of your brand every time someone comes in contact with you or your brand.”

Knowing this makes it very simple to understand that to increase the “value” of your service offering. You must constantly and consistently increase the perceived value of the service you provide.  As long as your perceived value is far beyond the price you charge, your service will be perceived as valuable.

Confusing value and price is the easiest way to deter customers from coming back, and ruins all chances of loyalty.

How do you increase your brands value every time you come in contact with a customer?

This post was inspired by the Book Start With Why by Simon Sinek, in it he talks about the different between price and value and how most companies get it wrong.

2 replies
  1. Marc Kelly
    Marc Kelly says:

    This might be an academic point, but shouldn’t the objective be to ensure that perceived value equals price? As the vendor of the service, I wouldn’t want to be leaving any money on the table. Wouldn’t a customer be pleased to pay for the value that they expected?

  2. Jeph Maystruck
    Jeph Maystruck says:

    You’re right Marc, customers are usually pleased to pay for the expected value of a service. But I believe providing “just enough” value isn’t something that spreads. The notion of “I wouldn’t want to leave any money on the table” is fine for Wal-Mart and Tim Horton’s, who need to maximize profit. But for small, growing companies the best way to “spread their word” isn’t to “not leave any money on the table”. When you want to grow, word of mouth spreads by people talking about how valuable you are, not about how you “meet” expectations.

    I think it is an academic point in the fact that yes it makes sense in a classroom but the real world is not very often like how the classroom says it is. Thanks for the comment my friend.

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