In layman terms, value perception/perceived value is what your customers think your product is worth. Unlike prices -which you set, value perception is something that is determined by the customers. The price that you ask for your product must be in line with the clients’ value perception of that product.
If your clients perceive your product to be of a high value, you can charge more for it. This is applicable to almost anything. Whether you’re selling luxurious clothing or one of those pet rocks from the 70s, the concept remains the same.
There are many well-known cases throughout the history of marketing in which the value perception of a product had a massive impact. In the end, how much are people willing to pay for a product is just a matter of perception.
Why is value perception such a big deal
Improving the value perception that people have about your products is worth it for many reasons. Among all the things that you can do to increase your revenues, this is method is one of the most promising.
You can increase the quality of the product and make them better in every single way. However, if the way people see your products isn’t changed, all these efforts will be as good as useless.
On the other hand, you have the possibility of charging more for your products without changing anything about them. Being able to charge more without increasing your costs makes changing people’s value perception highly lucrative to any business owner. This also allows for value-based pricing model, instead of one that’s based on production costs.
Value Perception Strategies
Getting people to change their existing perception of something is never easy. Despite the difficulty of changing the value perception of a product, the reward is worth the effort.
There are many tried-and-tested strategies that major companies use to increase the value perception of their product. The following are two of the most common strategies.
Showing people what happens behind the scenes
This is a value perception strategy that is heavily used by companies that sell expensive products. Perhaps one of the most famous companies that use this strategy is Apple.
At first, you might feel hesitant about paying $1000 of your hard-earned cash for the latest iPhone. However, once you see the amount of research that was needed to create the final product, their price tag starts to seem a little bit more reasonable.
Rolex is another company that uses this strategy. Paying $10,000 for a watch is too much? What if you know that this watch needs a year to assemble? What if you learn about the accuracy level needed to put all the pieces together? Knowing such things certainly helps increase the value perception of a product.
By learning about the work that goes behind the scenes, people appreciate the value of an item more. This is a strategy that’s applicable to almost any product, especially high-end ones.
Your offering might be the same as your competitors. However, with some smart value reframing, you can make it seem much better than it is. There is a timeless example when it comes to reframing value.
You need a critical surgery and you get to choose between two doctors. The first one has a 50% chance of post-operative survival while the other has a 50% of post-operative death, which one will you choose?
Despite being the exact same thing, most people choose a 50% chance of survival over a 50% chance of dying at any given time. By reframing your value in a smart way, you can get people to pay more for the same thing, and sometimes less.
A $3/day is more attractive than having to pay $1000 per year, even though $3 per day is more. Whatever the product or service that you’re selling, introducing it in a different way can affect people’s value perception significantly.
Adding a cause
Ever wondered why almost every major corporation support some kind of a cause? Products and services that support some cause are better perceived by people. Even if those products cost more than the competitors, people feel comfortable paying more money for them.
By supporting a cause and directing a part of their revenues to that cause, companies make a higher price tag for their product more justifiable. Not only does this make higher prices acceptable, it also gives the companies a more humane look.
By supporting a cause that matters to you and your customers, you can make more money while contributing to the greater good.
How can Sniffie help?
Changing the perceived value of a product or service is often a lengthy process that requires lots of work. Using the right tools can help make the research phase of the process much easier. Knowing the average perceived value of the item that you’re selling as well as that of the competitors is essential for success.
With Sniffie’s help, you’ll be able to analyze the prices of similar products or services. By doing so, you’ll have a clear understanding of the perceived value of your product compared to similar one.
How to use value perception
- Conduct research on the price of similar items.
- Find out the average price for similar products.
- Find out the competitive advantages of similar products.
- Decide on a suitable value perception improvement strategy.
- Follow the strategy to increase the perceived value of your product.
- Used with a new or existing product to improve how people see it compared to other available alternatives. The more value perception a product has the more people are willing to pay for it.
- Compare your value perception to similar products.
- Give the research phase the time it needs.
- Use a value perception strategy that’s suitable for your company.