Price is what you pay and value is what you receive.
Defining the value that you are providing should come before defining the price and that’s because it can be influenced by lots and lots of things, including, but not limited to:
- Level of service
- After-sales services
The principle of the ‘value first’ model is concentrating on how and with what you meet your customers needs. Once you define this and become competent at explaining it you will attract the customers that appreciate the value of what you are offering. A good example of this is the women’s driving instructor we worked with recently. She specialises in dealing with vulnerable people and she will be valued by pupils who lack confidence or who have had negative social situations than by confident young drivers. Her value is defined by what she offers in terms of experience and approach rather than the price she charges.
Another good example of this is the designer we worked with who was able to justify an increase in his price because he stopped talking about price per drawing and concentrated on the fact that his turn-around of the drawings reduced from 5 days to 48 hours – because he outsourced them. He massively increased the speed and quality of his service and that increased the value to his clients who needed a much quicker turnaround.
If you start with pricing or prioritise it above the value you are providing, you can forever be justifying your numbers to people who you may not want to work with anyway. Those people are always chasing numbers.
If you define the value that you provide and combine it with conscious pricing. it is the best way to place your product or service on the market. One of the biggest obstacles to overcome as a business owner when it comes to value, is allowing those who don’t see your value to move on and find someone else.
So before you do anything else, sit down and have a good think about the value in what you do.
Here is a link to further reading about value
Our next blog to fix a business headache is all about pricing – Pricing – Getting it right, first time.