Our consumer driven economy focuses on price all of the time. We see commercials for falling prices, prices being slashed, once-in-a-lifetime pricing and so on. It’s therefore not surprising that the first question on most people’s minds when talking about your product is “what will it cost?”
We know that this is a backwards way to start the conversation; that thinking about the money spent BEFORE thinking about the value of the product misses the entire point of the purchase. But, what does that elusive word “value” even mean? How do you begin to explain it to your customers?
I will define value as equaling utility minus price: Value= Utility-Price. You can only have a positive value when the utility received is greater than the price paid. You can say that utility is subjective, but so is price.
Here is an example: Toys. In today’s market you can buy low priced toys – lots of them. Frequently, however, these toys don’t work when they come out of the box or they break very quickly. Worse yet, some toys have been known to have toxic finishes. Yes, the toy’s price is low, but the toy’s utility isn’t high either. When you add the monetary price of the toy, the disappointment of your child and the comforting you’ll need to provide to make up for it, you quickly learn that the actual price of that toy is much higher than what was listed on the tag. If your child’s health is harmed by the toy, the “cost” escalates, and you find that the low price wasn’t worth the net value at all.
Now compare this low priced toy to a wooden toy that costs 4 to 10 times more money but is guaranteed non-toxic and durable. Yes, the cost is much higher, but your child will enjoy it for years and possibly pass that toy down to their children and grandchildren. Your children are happy and you are happy, which creates a lot of utility and a quiet home. My own children are enjoying a wooden roll top desk that was purchased by my grandparents for my uncle, used by my mother, sister, myself, a niece and now my children – three generations of utility. Now, that’s a lot of value. To put it in terms of the value equation, High Value = Very High Utility over Time – Initial High Price. You still come out with more in the end than you spent in the beginning.
My point in this rambling about children’s toys is that when you educate clients about your products and they want to immediately talk about the price, inform the client about the high level of utility they will be receiving for the money spent. It’s up to you to illustrate that your product has significant value for the customer.
This isn’t the easiest thing to do in a price-obsessed consumer driven culture, but if you believe in your work enough to spend so many hours making it, show your customer why it’s worth it. Products with low prices and low utility seem to be the drug of choice for many American consumers. We can sober up and change that habit. As consumers ourselves, we benefit by selecting those products that offer the most value. As producers we need to shift our discussions towards value and away from price. We need to demonstrate how our products will provide our clients with the most value. Don’t talk about slashing prices and great discounts, discuss increased utility and rising values. When you can demonstrate the high level of value that your product provides, price becomes secondary.
Patrick Kennedy of Superior Woodcraft is a frequent contributor to the Pro Shop blog. If you would like to contribute articles on the business of woodworking, effective marketing, and tips on transitioning to a professional woodworking career simply comment on this post!
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