Price and value

Sign in a popular restaurant. T-bone 99¢ – With meat
$14.95 
Both good prices. One for you and one for the
dog. At least they get some smiles out of the customers.

In business prices are set by the seller. Usually at the
point where it achieves the most profit. If you are
selling commodities like gasoline, canned beans or
laundry soap pricing is tight. Most of us feel those
products are the same no matter the brand name so
pennies will make a difference.

If you are selling individual value items like homes,
cars or watches you must convince me that yours is
more sought after, will do more, last longer or hold it’s
value better. Sales pitch is more important than pricing.

My economy car and your luxury car both take us to
work in the morning and we probably both think ours is
a better deal. We bought two different sales pitches
because at the time I thought economy was more
important than luxury and you didn’t.

Lesson for the seller: The key is matching the product,
price and sales pitch to the wants and needs of the
customer right now. Ads and pitches don’t work
otherwise.

Lesson for the buyer: Think carefully about what is
valuable to you. Comfort? Appearance? Budget? Bells
and whistles? Find ads and pitches that match.

I remember buying an expensive high chair for our
first child because the salesman convinced us it was
safer and would last longer. He sat on it, dumped it over,
jumped on it and didn’t hurt it. He got us because he
made us feel embarrassed and guilty if we didn’t keep
the child safe.

We paid triple the price of a cheap one and I don’t know
whether it was safer or lasted longer. Who keeps track
of those things? The kids didn’t fall out of or hurt
themselves on it or the cheaper ones we bought later.

Another example is a washing machine we bought for
half again as much as a cheap one mostly because it
had more buttons to push for fast, slow, hot, cold, etc.
Later I noticed we left it on the same setting all the time.
We wasted our expensive buttons. Seemed like a good
idea at the time.

I had the experience of working part time in an
appliance store when I was young. We had three tiers
of pricing on the TV’s, refrigerators, etc. I started with
the highest and progressed downward as needed to
try and make the sale.

Car sales people will do the same thing. “Price too
high? Let me go check with the boss and see what we
can do.”
Internet sales pitches frequently have a pop
up screen if you try to leave without buying. Some
variation of “Wait, don’t go. I’ll knock off a few
bucks.”
In both cases it frequently works.

Bottom lines:

  • Things are worth what people will pay for them.
  • It varies from person to person.
  • Prices can be flexible if you work them a little.
  • No sale is made until buyers and sellers agree.
  • Buyers should take their time. No rush.
  • Sellers should  take their time. No rush.
  • Relaxed and friendly works for both.

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Ken