Product Value is the worth of a good or service. To a company, the price of a product depends on its production costs. To a target customer, the cost must be weighed against its perceived value. Value seems a simple concept. Yet it can be complicated. Why does a BMW cost more than a Toyota but less than a Bentley? While there are certainly differences in production costs, technology, marketing and more, the biggest difference is the perception of the product value. This is why cars depreciate so quickly. That perception quickly fades and equalizes over time.
The Concept of Product Value
The concept of value depends on two aspects according to the Product Board: its absolute and relative value. Absolute value is how well a product meets customers needs, whereas the product in perspective to available alternatives is its relative value.
The primary goal is to ascertain the ideal price point for a product or service. By adding value to your brand, you can build a strong bond between your business and your clients. This bond gives you additional pricing leverage.
Here are some pricing concepts based on an article in Small Business Chron:
- Pricing Strategy. Pricing fairly appeals to cost-conscious customers and keeps them coming back. Value-oriented pricing successfully markets a product at a consistent price point.
- Target Market. Setting prices to appeal to a specific target market works to narrow the audience and create marketing messages that specifically appeal to this audience and their perceived price point.
- Message Strategy. Promotional messages accurately convey your value proposition. The distinct attributes that separate your brand from competitors make it stand out from the others.
- Product Development. Knowing your product’s potential market value also helps guide pricing. It influences strategies for product enhancements which can bring additional value to the product or service. Doing so puts you in a position to improve the product’s worth to eventually command higher prices.
How to Increase Product Value
Increasing product values takes some critical thinking. According to Price Intelligently, here are five easy ways to do it:
- Add a Useful Feature. Inform your target market about different ways of using the product. Target a specific pain point. Discuss lesser known features or services that address real-world issues.
- Consider the Tastes & Preferences of Consumers. The desire to purchase a product is affected by influence, trends, and emotions. A popular personality can add value by endorsing a product. Influencers are a big thing now, especially with Millenials. Likewise, humor or creativity can trigger impulse buying.
- Target Customers by Income. Build your store for the right audience. Adjusting to your customer’s income centers on either going upstream or downstream with your product promotion. Make sure you identify related demographics to understand how best to reach your audience.
- Use Price Comparison. Make smart use of price comparison websites. Compare the level of service. Check for competitor gaps to make your product stand out. Staying updated on price trends can keep you ahead of the competition. Know what your competitors are charging and why.
- Create the Urgency to Purchase. With all of the review tools available and shopping options, customers can sometimes fall into analysis paralysis. Use time tested sales techniques to push customers to the finish line. It’s not to be overly aggressive, it’s to remove doubt and finish the sale.
The concept of product value is not simple after all. Five easy ways to increase product value are: to add useful features, consider taste and preferences, target customers by income, use price comparison, and create the urgency to purchase. These techniques can help in determining what is the right price for your product.