We see this every day in the marketplace: Brands with some cachet are priced higher. Value is subjective. Price is set by what the market will bear.
This is very basic, but sometimes we lose perspective when we start valuing our own products or services. We know what raw materials went into the product and exactly what it cost to produce. We incorrectly assume that some standard markup percentage will suffice to price the item. If we sell services, we might think it’s better to bid low rather than risk losing the work. If we look deeper, however, what we find is that a premium product or service often attracts more business. This is the basis of the concepts of differentiation and value-added.
Here are some steps to take to make sure you are not undervaluing your product or service:
- Know your market – If you have a basic understanding of what your customers consider a fair price, you are halfway home
- Differentiate your product or service – You should be able to clearly articulate why your customers should choose you as opposed to your competition, even if you cost more
- Brand yourself appropriately – If you are a Spanish (i.e., special) olive, make sure your customers can clearly see that, and will know they are getting a premium product or service
This post originally appeared on The Management Experts
Photo Credit: Graham Colm