Perceived value, discounted value, absolute value or no value. It’s always a difficult decision when you offer new services or products into a new market as to whether you should discount your offerings.
I had an interesting discussion with a colleague the other day on the differences between a Lexus and a Toyota. OK, they are owned by the same company, but his conclusion was that they were one and the same.
But they are not.
Lexus are rear wheel drive cars aimed at competing with BMW and Mercedes. Toyota is aimed at competing with Ford and Subaru. As I see it, Ferrari and Fiat are owned by the same company and no one can mistake a Ferrari California for a Fiat 500. The same company structures selling brands with very different perceptions.
Let’s look at another example. There are many cafes and restaurants outside of Auckland all offering differing quality of meals and asking top dollar or “Auckland” prices. If we use the same analogy of perceived value should I go into these cafes and ask for a 50% discount because I am not in Auckland?
My conclusion is this:
If the meal is great, I have no hesitation paying the amount for the right experience regardless of where I am. If the perceived value is there with your product or service then it won’t matter. You set the price because it’s your brand. Your positioning. Don’t be dictated to because others have not been able to deliver the same outcomes.
Let’s face it:
Great fresh fish of the day, wherever it’s served, will make you taste and savour the flavours and have you back for more. Equally, a bad fish experience leaves you with a salty, fishy taste in your mouth and an experience not to be repeated. So You set the price for your service. Add the perceived value. Deliver on the value. The referrals will come. If it ever becomes only about the price then add MORE value.
That’s what Lexus does. Its standard equipment list makes its competitors a little “tight” in comparison. A discounted price is just that – there’s nowhere else to go.
Love to hear your thoughts on perceived value versus price point so leave them here.
Until next week,