Value versus price

How to sell value versus price? How does selling based on price competition, versus selling based on the #value proposition to the customer, affect profitability and customer satisfaction? Customers don’t buy a product or service, they buy the results or benefits that a product or service gives them.

What if Rick strikes up a conversation with John first, and finds out what is important to his potential customer. Is John buying food for a special occasion? Is John looking for a certain taste? It turns out that John has recently become very health-conscious. Based on that important information, Rick explains him the features of fish as a product, and the benefits to a healthy lifestyle of ingesting a sufficient amount of omega 3 fatty acids and protein, which are to be found in abundance in fish. John gets a lot more excited! The perceived value of the fish goes up significantly now that he understands the value to him. The price of $7 sounds like a very good offer now that the perceived value to the customer is $10. If a sale is made on these terms and with these assumptions, both John and Rick could turn out to be happy. John the customer because he gets great value for money, and introduces more variety into his meals. Rick the seller because he makes enough margin in relation to the time and effort he puts into his business, ensuring he will stay in business for years to come. The “system” benefit (value to customer, minus cost to seller) has grown to $6, due to different framing. Remember that customers don’t buy a product or service, they buy the results or benefits that a product or service gives them.

Philip de Vroe (The Finance Storyteller) aims to make strategy, finance and leadership enjoyable and easier to understand. Learn the #business and accounting vocabulary to join the conversation with your CEO at your company. Understand how financial statements work in order to make better stock market investing decisions. Philip delivers #financetraining in various formats: YouTube videos, classroom sessions, webinars, and business simulations. Connect with me through Linked In!