Impact Pricing Blog

The Price/Value Tradeoff

Buyers only buy when they perceive the value is higher than the price. If you don’t have enough buyers, either your price is too high or the customer’s perceived value is too low. You have two options.

Lower your price. This is the easy way out. It hurts profits. It cheapens your brand image. It should be your LAST choice.

Increase your customer’s perceived value. This is why you’re in business anyway. You should be building great products and services, better than your competitors. You should be marketing and communicating the value of your product and especially the value of your differentiation. Yes, this is harder than lowering your price, but this is business.  

To be fair, there are many nuances to both price decreases and to increasing customer perceived value. But the big picture question is exactly right. Which does your company focus on? Which do your salespeople focus on? Which do you focus on? My advice, go ahead and lower your price, but only after you’ve made a herculean effort to communicate your value.  

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