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What Is Price?
July 13, 2010 - Dale Furtwengler
Ridiculous question...
...or thought-provoking insight?
Ted Gorski, Executive Coach and host of The Business Advantage Radio Show at WKXL 1450AM, asked me that question a few weeks ago in an interview that aired on his show.
I must admit that I was taken aback by the question. I had not previously sought to define the term ‘price.’ Fortunately, the answer came fairly quickly. To me, price is an indicator of value. Unfortunately, too often, that isn’t the case.
A few companies charge premium prices, then fail to deliver the value. These companies tend not to survive very long. It’s one thing to disappoint a buyer who was bargain hunting, but to disappoint one that’s paid a premium price to get what they truly want is unforgivable.
The vast majority of sellers err the other way. They feel trapped by industry pricing so they charge what their competitors are charging even though they’re providing greater value. Buyers love it! Or do they?
When buyers don’t have an effective way to distinguish one offering from another; when they can’t determine why one offering is more valuable than another, they view all the offerings as commodities. This does NOT help them make informed decisions. Consequently, buyers rarely experience the satisfaction they should with the purchases they make.
It’s counter-intuitive, but your price should substantiate your value claims. It not only allows you to get higher prices for your offerings, it enhances your buyers’ experience. So the next time you establish your price, ask yourself this question “Does this price accurately reflect the value I provide?”
For more pricing tips visit http://www.pricingforprofitbook.com.
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