Stop Selling Products & Start Start Selling Value (& Charge Whatever You Want)

If you want to build a valuable business, then you must be focused on how to maximize profit long term. And in our ecommerce business value equation, increasing the price of your products (not your AOV, but the actual price you charge) is a critical lever in being able to generate more profit. But most businesses aren’t able to do that. They feel stuck under a price ceiling, chained down by competitors, market price, what people can afford, and what people seem “willing” to pay.

The problem is, pricing a product based on what your customers can afford is actually completely backwards. That may sound crazy, but think about it this way: People can find a way to afford any amount of money, assuming it’s worth the result.

For example, imagine there was a magic machine that could magically double one million dollars. All you had to do was bring one million dollars. Even if that was nowhere near what you thought you could ever afford, wouldn’t you be motivated to find it?

Just like that example, your product is measured against the result it provides. The result or benefit your product offers gives your product perceived value. Sure, competitor pricing and the market plays a role in how you communicate the value, but the key is the customer perceived value itself. And you must compete on value, not price. If you don’t, it’s a race to the bottom.

That’s why in this post we will show you why value is the only thing that matters when pricing your product and how to increase that customer perceived value so you can charge more for your products.

Believed Results: The Building Blocks of Perceived Value in Marketing

Every product, no matter what it is, is on the path between a person and a desired result in their life. The more desirable the result is and the quicker your product helps achieve that result is directly related to your product’s value.
The important thing to understand is that what is considered “valuable” and what results are beneficial for a person are all a matter of perception. It all depends on how the customer interprets the results they want to achieve. There is no universal value for any product or result, because everyone assigns different values to different results.

The reason this is important is it means that we can influence that perception.

In this post, we’ll break down how you can increase the perceived value of a brand and your product, allowing you to increase the price you can charge for that product.

Note: You can use this for selfish reasons and be dishonest in the way you market and sell your products, but that’s not a long term strategy for a successful business. And since we want to be good people and build valuable businesses, the way we implement this has to be backed up by the product and business. Otherwise, it will simply self-destruct.

How to Increase the Perceived Value of Any Product or Service (and Therefore the Price)

Let’s use a quick illustration to unpack this.

What is the value of a lighter to you? Not much; they generally sell for a few dollars. But imagine you were stuck in the wilderness and starting a fire was critical to your survival. That same fire starter would be worth much more to you.

In this case, the situation dictated the perceived value of the product, but we can actually influence the perceived value by simply creating the right story and communicating it effectively. That is done in four ways.

4 Components of Value Creation

There are four components of value creation. We can influence each one to stack the perceived value of your product and business.

1. Perception (Belief)

Perception is what people believe to be true about a product. It’s the meaning THEY assign to it. This means that just because you claim a product helps the customer achieve a desired result isn’t enough. They must believe it’s true.

So in the example of the lighter, someone must believe that the lighter CAN make fire. If they don’t believe that, then the value is low.
Belief is also a spectrum. It’s not a yes or no. People must have strong certainty in what the product can do for them. And since that level of certainty falls across a spectrum, it can be increased.

So how do you improve perception? Your brand is key. This sparks intrigue, communicates expertise, and builds trust— all of which improves the customer’s perception. The story you tell about your brand and the product you’re selling is also critical. Storytelling helps create a vision for your customers about how your product will help them achieve a result, again, improving perception.

2. Perspective (Situation)

Perspective is the way someone views your product. Perspective is based on their situation; some need or want a result more than others. And it differs from perception. Think of perspective as the type of lens you look through while perception is what you actually see through that lens.

So how do you improve perspective? This is where understanding and defining your target market comes in. First, define your target market and choose an audience who are in situations that lead them to highly value the results your product creates. To do this, you’ll need to understand your audience’s desires, pain points, and present situation deeply. Then, use that to paint a compelling story, showing them the value of your product (since they might not yet be aware of it). All of this comes back to creating customer avatars.

Back to the example of the lighter, a customer might believe that the lighter will make fire. But if they aren’t stranded in the wilderness and instead are safe at home, the value of that lighter isn’t very high to them.

Here’s another example: Say you sell silicone wedding rings for adventurous, active people, that are safer than traditional bands. From the perspective of a man who works in an office, hires out his landscaping, rarely plays sports, and prefers reading at a coffee shop over rock climbing, paying $39.95 for a silicone ring makes zero sense. But for a carpenter, athlete, hunter, backpacker, etc., their situation changes their perspective. Their lifestyle can put them in harm’s way, and that silicone ring’s ability to break under pressure could save their hand. Plus, the ring comes with an amazing branded experience that aligns with their desire for an adventurous life! From that audience’s perspective, the ring has a ton of value.

3. Promise

Promise is about what your product actually does. When selling products, the best promise wins— not the best product. People buy based on promise, and your product MUST fulfill on that.
This is similar to perception in that promise helps define your customer’s belief about what the product can do. However, the promise differs in that it comes from you (the brand) while perception comes from the customer.

So in the example of the lighter, the promise is that the lighter will start a fire and it’s dependable enough to keep providing fire for a long time. That must be true for customers to purchase and then for more to keep buying from you.

How do you improve the promise of your product? Use information to communicate with great conviction what the product will do for your customer. Associate this with what the customer cares about— this likely has to do with either results or status. Make sure you explain this in-depth as well. Don’t just assume things are obvious. Leverage all the assets or benefits your product delivers to paint a clear vision and solid promise of value.

4. Price

Price is the last component of value. This is the sacrifice the customer must make in order to achieve the result they want from your product. As they view the product page and all its details, this is what they’re weighing in their head. “Is the result I’ll get from this worth the cost?”

Note that cost includes money as well as other elements like time and effort on their part. So in the example of the lighter, speed is important. A lighter provides instant fire, rather than the cost of taking time to rub two sticks together for a while, hoping for a spark. The cost of the lighter that the customer is willing to pay factors in not just the money, but the time savings.

So how do you improve the price of your product? Rather than positioning your product directly against a competitor, position it against the results it brings. You might also position it against the cost of not buying this product today. What’s the cost of putting off the results they hope this product could help them achieve? And as we just mentioned, focus on total cost savings. Create a value stack that shows the money spent vs. the time and effort they save by buying this product today.

Understanding Value Changes the Way You Sell

Understanding that value is relative to a customer’s perception and perspective is a powerful shift. By leveraging your product’s value and the four components to increase that value, it’s likely that you will be able to increase your price without customer frustration. It all depends on the information you communicate to your customers and how you present that information. That crucial communication needs to be done through a great website, effective marketing, intentional email strategy, thoughtful packaging, and impactful content.

If you’re a 6-9 figure ecommerce brand that would like to work with our team of experts to increase your brand’s growth and value, click below to contact us.


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