There’s a theory about the difference between price (or cost) and value. But how can it help with your business?
Before we answer that let’s understand the difference. Price is the amount paid so it could be the amount paid to see ‘The Eagles’ live, something I did a few years ago. £85 by the way. That included the original lineup. They were spectacular playing a wall of sound for over three hours.
In 2017 Glenn Frey a founding member of the band died, and so the concert I saw could never be seen again.
The value of something is the utility of the service to the consumer. To me, the value of that ticket far surpassed its price. At the time many times the price. Had I known that would be the last time it was possible to see the full line up my value would have been many times even that.
If I were a 21 year old fan of hip hop who never heard of the eagles my value would probably be far less than the price.
So the key to pricing your product properly and getting the maximum price is to understand its value to your key customer. Those that don’t value what you do will never pay the top rate. Those who do will and they’ll be happy with the price because to them it represents good value.
Try this to show the difference. Ask 10 people this question. ‘How much would you pay (assuming you’re moving house) for a removals firm to come and box up your belongings transport them to your new house and unpack them in the correct rooms?’ You will get a range of prices that vary up to as much as £1,500. Of course when I say price I really mean value.
