Business Lessons – a few thoughts on Price

Nothing in life is free, we all know this to be true. Yet so often we discuss price when the real issue of importance is perceived value. Allow me to explain, thetrue question is if item or service you are considering buying is worth the cost you will have to pay to acquire it. If the cost is too low you will perceive it as cheap substandard, if the cost is too high it will be perceived that you are being taken advantage of the client or buyer. The trick then is finding that right price point that you or the client/customer is willing to pay to acquire the goods or services. 

Finding the right price point is as much of an art as it is a science in that it is not the same for everyone so you have to normalize it to some extent and set a price the largest number of people are comfortable with paying in order to maximize your profit. Understand regardless of what you do for some you are always going to be too expensive and ye for others too cheap but you need to find that sweet spot that works. 

Why is it as much of an art as a science? Simple – valuation is very subjective and you have to account for an intangible that is difficult, the value a client or buyer places on themselves, their business, or their process. Remember their personal value determines if the price is too high to too low. If your price is too low they will infer your service or product is inferior and if too high they will look for excuses to not pay or will seek a more convenient solution because they value themselves or their company less than you do your product or service. 

Same goes for an employee. Many consider employees as possessions instead of investments in the companies future and this difference in attitude plays out in so many different ways with respect to how they see themselves, their personal value to the company, the price they are willing to pay and how much they are willing to contribute to the company’s long term will being. So price or rather perceived value is important on so many levels. 

So always work to consider when pricing your product or service to never over or under price yourself and know that regardless of the price some people will always never be willing to pay even if your price point is totally reasonable. 

Image source Boxes and Arrows