Price and Value

Incorrect pricing in a crowded market can send your customer flocking to a competitor's doors. This doesn't necessarily mean not being low enough, it means being the right price for the right value. People expect to pay for what they get and if the price is too high or too low, they start to wonder what's wrong.

But competitors won't always dictate your pricing guidelines if you provide and prove reasons for higher value. Higher perceived value can justify higher prices if the customer really "wants" the higher value and recognizes it. If they don't care about a greater value or don't really believe it's there, they may balk at a higher price. You must prove to them that it's worth more, not just tell them. It's what benefits them that counts, not just the product features. The perceived customer value will come before the price they will pay.

From chapter 14 of my new book "The Smart Guide to Starting a Business" available on Amazon and elsewhere in October 2011