This is part 2 in a 5 part series: Big Picture Ideas for Small Businesses.
Pricing is a touchy subject. It dictates your marketing strategy, your target demographics, payroll, staffing, and day-to-day expenses. It’s what brings revenue into your company and what crafts an image outside of it.
Whatever you’re asking the customer to spend, there is one particular rule of thumb that every business should abide by; Don’t Cheapen Your Product. I’m not necessarily talking about price, which can and probably will fluctuate over time. More accurately, I’m talking about perceived value or how much a customer thinks your product is actually worth, irrespective of price.
Omega watches have a high perceived value because there is an expectation surrounding their craftsmanship that precedes their name. The price is set accordingly, and the brand being around for 150 years is a testament to that. Another example is Linux, the free and open-source operating system whose kernel was created by Linus Torvalds in 1991. Despite being completely free, Linux has a tremendously high perceived value; so much so that corporations ranging from IBM to Novell have embraced it as a cornerstone of their respective business models.
So, how do you avoid a low perceived value? Here are two general cues to help you streamline and communicate the value of your product or service in an age where competition can come from anywhere.