Surface Ripples

When Prices Are "Too High"

 A friend of mine was recently quoted £200 for a contractor to pressure wash his paved driveway. For the same amount of money, he bought his own pressure hose.

This got me thinking: my friend is now the proud owner of a pressure hose with which he can now clean any part of his house or car and lend to neighbours as he sees fit. He also, however, needs to store it, maintain it and deal with any other technical issues that might arise. These would normally be dealt with the contractor who charged him or quoted him the original £200 price.

At what point do our products or services become “too expensive” for our customers? There seems to be a psychological barrier above which customers consider something is “too expensive”, but this can vary depending on any number of factors.

As business owners, it’s our job to understand this price limit and work as best we can within it. Go “too high” and business drops off.

Good businesses know how high they can go.  Another point is that customers may be prepared to pay more if they consider that that product or service delivered by that particular business is worth it. In other words, if they think that we provide better service or added value than the competition, our price may be less of a factor in the buying decision. 

I have no idea of all the factors that my friend took into account when making his decision to buy his own pressure hose, but for whatever reason, this particular business failed to convince him that they were delivering value for money. This is the key issue for any business.

How do we as business owners, convince customers that our products or services represent real value?

I’ve spent more than half my life delivering change in different world markets from the most developed to “emerging” economies. With a wealth of international experience in international financial services around the world running different operations and lending businesses, I started my own Consultancy to provide solutions for improving performance, productivity and risk management.  I work with individuals, small businesses, charities, quoted companies and academic institutions across the world. An international speaker, trainer, author and fund-raiser, I can be contacted by email. My website provides a full picture of my portfolio of services.  For strategic questions that you should be asking yourself, follow me at @wkm610.

Labels: Customer Care, Financial, Selling, Strategy

posted by William Martin @ 16:54