There is nothing like a product being `too expensive’.
If it were, then brands like Apple, Lamborghini and Rolls Royce would be out of business.
As the seller, you always set the price of a product. This price should always include operational costs (costs incurred in making/offering the product/service) and profit. The customer on the other hand, creates the value of the product. If the value of the product is more than its price, then the customer will always buy from you. A customer who understands the value of a product, will pay any amount to acquire it.
Value can include what solutions the product offers to the customer, what emotions the product evoke in the customer when using it.
Case Study
Rolls Royce, as a company, has been making luxury cars since the early 20th Century. It prides itself in making bespoke luxury cars for its target customers. These cars are usually priced at a premium. But how does Rolls Royce continue to sell even with the premium prices?
- Rolls Royce RARELY advertises on TV. This is because a Rolls Royce customer will rarely be found watching TV at any given time. Instead, they display their new luxury cars in airshows and conduct test drives for the customers with their car releases.
- Rolls Royce mostly allows customers who have purchased previous Rolls Royce cars to take part in their test drives. These are customers who already know the value of a Royce and would not hesitate in spending on a new release. A new customer can only be referred by one who already owns Royce cars.
- Rolls Royce does not include prices of their cars. A Rolls Royce customer does not care about its price. He/she is more intrigued by its value, the emotion it evokes in him/her, when driving and the new features the car has.
Key Take-Aways
- Know where exactly to find your target customer and adapt your marketing to them. Which social media channel are they found? Do they prefer Instagram or Facebook? Or Emails? Do not just market to everyone and claim to be `affordable’. There are people willing to pay a higher price for your product. If possible, offer packages from the cheapest to the most expensive to cater for all customers’ purchasing power.
- Encourage repeat customers. Create a system where a customer buys from you repeatedly. These customers already understand the value of your product. Encourage them to refer their network to you. Customer referrals/Word of Mouth is the number one means of marketing. People buy from people.
- Make the customer understand what value your product/service is offering to him/her. This can be the solution the product offers in solving the customer’s problem.
