You Can’t Escape The Link Between Pricing and Value Perception

Regardless of your personal feelings about that there are vast swathes of the market that still believe that the most expensive product is the best.

This might not be something they articulate with their words but is evident in their actions.

Pricing also has an anchoring affect in that if you price something very cheaply initially it will be hard for your to raise the price of that product as in consumers minds it’s established in the lower price end of the category.

Equally there has over the last 20 years a big movement in the freemium model of pricing where the product or service is given away for free to get customers with the tiered “pro” level pricing to cover the costs of the whole product.

The danger of freemium is two fold:

  • The core product gets established in customers minds as essentially valueless
  • As businesses try to move their customers up the pricing tiers it’s hard to find the additional features that they will pay for having received the core product for free.

At the other end of the spectrum you’ve products and services that are over priced for the value they communicate to their customers.

These products might be trying to establish themselves as luxury brands but perhaps don’t have the brand yet established to back this up.

So with your pricing be very clear on how you want it to establish value in the minds of your customers and price your offering accordingly.

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