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:

• Customers are value conscious rather than price conscious e.g. some customers will pay extra for prompt delivery.
• Customers assign a personal value to a product or service e.g. a teenager is willing to pay a premium price for a concert performed by his idol.
• The selling price is based on customers' perceived value rather than on the vendor's costs e.g. an ebook costs less to produce than a paperback but readers will pay more for it because of the value placed on format and instant delivery.

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
Value-added benefits do not replace comprehensive product information but are complimentary strategies to help converting website visitors into customers and giving you the competitive edge. Try these value-pricing strategies:

• Special packaging e.g. recyclable containers, gift wrapping with card
• Package deals (for convenience) e.g. bundles, "all inclusive" value pack
• Fulfilment options e.g. "white glove" delivery service, instant download
• Payment options e.g. monthly and yearly plans
• Free training material e.g. online manual, video, audio
• Personalised service e.g. "I oversee each account"
• Free product updates or refreshers (for courses)
• Bonus offers
• Certification e.g. licence, training certificate

Reducing perceived risks
For new customers, there is always an element of risk in purchasing from a new vendor, especially over the internet. These are examples of value-pricing strategies to boost confidence and credibility:

• A professionally designed website
• Free trials or samples
• Extended warranty option
• Free after-sales service
• Your credentials, length of time in business, list of important clients
• Guarantees of satisfaction "100% satisfaction guarantee"
• User-friendly privacy, security and refund policies
• Testimonials, endorsements, reviews
• Easy access with contact options e.g. toll free number, chat live

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.
"We're not the cheapest but...we offer 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

---

Brand Warfare is More of a War than You Think

We will discuss Brand Marketing for a minute. In this... Read More

The Art of Successful Branding

Branding: it's a term that carries great weight in the... Read More

Does Your Message Pass the Test?

Develop an effective benefit message and you're well on your... Read More

The Positioning of Success

Many businesses of today are often driven to compete... Read More

You Bored Me at Hello - Top Three Strategies for Networking Your Brand

"You had me at hello," those famous words from the... Read More

Branding 101: Why Its Critical to Business Success and How to Do It Right

What's Your Brand?A brand is a product/company personality that helps... Read More

Adventures in Advertising and the Affect on the Brand Name

Studying various target-marketing techniques and here is a thought. We... Read More

Branding Is Not Selling Out: ITS SELLING IN

Ever see an amazing band perform and wonder why you've... Read More

Value-pricing Strategy: Were not The Cheapest but...

In this highly competitive online marketplace, it can be difficult... Read More

A Lesson in Branding from Paris Hilton

I have never been a fan of Paris Hilton.I see... Read More

Entrepreneur Speaks on Brand Extension in the Franchise Cleaning Business

On question I have been asked over and over again... Read More

Your Business Logo and Color Scheme

My business logo and color scheme started one lovely spring... Read More

Business Case Study Automotive Detailing Franchise Company

How do automotive detailing companies start? What makes them work... Read More

Brilliant Branding Builds Business

Branding is more than product recognition or a simple logo.... Read More

Brand Identity - Corporate Identity and Brand Value

Companies work hard building the strength of their brands -... Read More

Mascots ? The Killer Promotional Concept

Mascots are the unique dolls or puppets that help identify... Read More

Build Brand Value BIG Time

Ask your self this question, In which business are we... Read More

Jan Verhoeff: Brand Your Market

Marketing potential of any product is based on recognition and... Read More

Brand Components

Your brand is the culmination of everything about you and... Read More

Introduction to A Branded World: Adventures in Public Relations and the Creation Of Superbrands

You'd have to labor to shield yourself from the power... Read More

Brand Image ? Brand Identity Guru

Having a brand image is not a "have or have... Read More

Brand Strategy - Brand Value - Brand Identity Guru

Developing brand strategy is extremely critical. The most important asset... Read More

Simple Risk Reversal Formula Will Send Your Sales Into Space (1 of 2)

Make A Bold Promise Then Back It Up With An... Read More

Standing Under the Umbrella And Still Getting Wet

Make More Money Making a Name for YourselfCalling all realtors,... Read More

Planning Ahead With Your Designer: Tips For Design Consistency With Your Logo And Brand Elements

While we recommend that you contract with the same designer... Read More

How To Create A Brand That Sticks

Most people, when they hear the word branding, think logos... Read More

Branding Guru - Brand Identity Guru

Branding TodayHave you ever had a good brand experience? How... Read More

Branding - More Than Just a Statement - A Memory Scar

Conjure up in your mind broad rolling meadows with runs... Read More

Brand Equity - Brand Identity Guru

7 Qualities Of A Strong Brand:1. Commands premium pricing while... Read More

How a Great Tagline can Help your Business

"Just do it." "We try harder." "The Ultimate Driving Machine."... Read More

Importance of Business Branding

Branding is very important to a business, whether it is... Read More

Pressure Washing Companies and Co-Branding

Pressure washing companies often miss what we call 'super niche'... Read More

McDonalds Supply Chain of Potatoes

McDonald's buys its potatoes from corporate farmers in Idaho not... Read More