Would a Mercedes be a Mercedes if it cost half as much — or — would it cease to be a luxury vehicle?
I imagine if a Mercedes were suddenly the same price as an economy vehicle, the people who currently buy Mercedes would shift to buy something else. Part of what they’re buying is the luster of owning a vehicle not everyone can afford. Price supports an expectation of quality and the story the buyer conjures in their mind before and after the purchase.
It’s an interesting thought: Price has to match the perception of value.
Shift this to business.
Can you offer the highest quality product or service at a price all consumers can afford? How about the consultant who claims to be an expert, but offers a deeply discounted price? By offering a dirt-low price, are they sending the message to their intended customer that they’re really not the expert they claim to be?
Price sets an expectation of worth and value. We expect greater quality and effectiveness associated with a higher price.
Another thought: Let’s say you have a desperate need for an attorney. Two attorney’s offer identical services, claim the same skill-set and expertise, and walked the same career path. One attorney charges $500 an hour, the other charges $100 an hour. Wouldn’t we be skeptical of the $100 an hour attorney and believe the $500 an hour attorney is the better skilled?
Our challenge is to match our price strategy to our story and intended customer. Set your price too high and you may price yourself out of your market. Set your price too low and you may raise suspicion and undermine your story.
A product or service that doesn’t sell may be priced too low.
What do you think?