We’re here today talking with authority marketing specialist Tavis Bucklin about value. When you think about how you price your products or services do you base it solely off your competitors price? What should you be doing and how can you increase your prices while making your customers and clients even happier than they are right now?
-My first question for you Tavis is; what goes through a customers mind when they decide what they are willing to pay for a product or service?
Tavis- We may not always notice, but there are two parts we consider when placing a value on something.
We have to take a look at a couple of things.
First we have Practical Value this is what your product or service does. Your coat keeps you dry and warm. That’s it’s function.
Then we have Intrinsic Value this is the unseen perceived value that is created largely by positioning or promotion. This would be the extra cost you pay for a name brand coat.
The combination of the two makes up the Total Perceived Value.
This is something we see this every day. Brand names can charge more and we are glad to pay it.
This is basic stuff right?
– Well yeah, you can get a t-shirt for $10 but one with the right logo might cost $40 because of the brand name or the sports team.
Tavis-But like I said we are happy to pay for it.
An extreme version of that would be a brand like Gucci. A woman shopping for a Gucci handbag might find one she likes with $1,800 on the price tag. She is happy to pay it and she gets compliments wherever she goes.
Did she question the quality of the leather or the stitching? She didn’t need to, this is Gucci and they make a great product.
Now consider that you could buy a nice handbag for around $150. Do you think the extra value of the Gucci bag is in practical value or intrinsic value? We’re talking about a $1,700 difference in a handbag! I would be willing to bet around $300 of that is practical value. I would also be willing to bet the customer does not care either way.
Do you know why?
-She now has the status of owning a Gucci handbag.
Tavis- Right! She got exactly what she wanted and she is happy.
She is happy because her total perceived value is equal or above the cost of the bag.
Most products or services don’t have such a high ratio of intrinsic value. I use this example all the time because it makes intrinsic value so obvious. But if we think about it, most good products posses some level of intrinsic value.
-Does that mean some companies are basing price on practical value alone?
Tavis- A lot of companies do.
When you are selling a product that is available at the store across the street you don’t have much leeway on price. You are comparing apples to apples. But selling a unique product or services you have all the flexibility in the world.
-That explains how intrinsic value is added to a product, but what about services?
Tavis- This works the same for services. Specializing in a niche is one way to add value. I think most people understand that concept. Doctors, dentists, attorneys, you name it. In every line of business there are areas of specialty. I was getting my picture taken by a photographer the other day and I had a thought about photography niches. Some people only do weddings; some take pictures of babies, or classic cars. Anyway, I was wondering if there are photographers that specialize in shooting professionals. Ya know shots specifically for a website, social media that kind of thing.
-So some sort of image branding for business owners?
Tavis- Exactly! If people have the choice between getting a headshot from a photographer or to work with an “image branding specialist” (or what ever the title may be) someone who would take care of the image they project across their entire web presence, now that is something new and exciting that solves a specific problem.
– That seems to be the key we hear a lot in business today, solving niche problems.
Tavis- It is the key. If a photographer put together a few packages, maybe have one that covers social media with headshots and cover photos for Facebook, LinkedIn, Twitter or a You Tube channel and then send the finished photos pre-sized specifically for these sites, it would be a big help to professionals. They could have a package for quotes and the photographer could add quotes along side various photos or maybe some specific shots for banner and sidebar ads.
The point is it takes a photographer out of the sea of photographers and allows them to stand alone. They are not selling what the business across the street is selling. By being a personal branding business and not a picture taking business the fees can be much higher than the fee for getting a headshot. The product delivered is better for the client giving them exactly what they need. They are helping the client create an image and understand the clients goal.
– When you put it that way it sound like the two are a world apart.
Tavis- Well you can see how that adds intrinsic value. The photographer doesn’t have to work much harder to deliver a better product for the client.
Now imagine if this personal branding specialist had people writing about them. When you look them up you find publications on blogs, news sites, and other media. When other people talk about you, your products or your services it puts you in a great position.
This type of authority positioning from third party endorsements is better than any ad you could create. This is how you get the clients that are willing to pay for your premium services. They are also the clients that will benefit most from your services.