“Price is what you pay. Value is what you get.” – Warren Buffett
Warren Buffett is a pricing guru.
But he specialises in pricing companies on the stock market instead of pricing products.
His quote here is a great reminder to look at your product from your customer’s perspective.
Customers will only buy your product if they believe that the value they’re receiving is greater than the price they’re paying; otherwise, they won’t pay it.
Speaking of value, the number one pricing mistake business make is pricing to the value you put on the product and not your customer.
You are a consumer. You buy goods and services in the market and make value calculations every day. As a consumer you have a relationship with money. A set of beliefs that shape how you acquire it and spend it.
Brining these beliefs into your business can be fatal. It shapes the value you place on your product and puts a monetary figure on it. But this monetary figure bears no resemblance to the value seen by the person who matters most – your customer.
I’ve fallen into this trap myself.
Like wise old Uncle Warren say’s. Examine the value and ask yourself:
Does my price reflect the value I deliver to my customer?
The answer might surprise you.