Value versus cost: 10 Things I learned about branding this week

Value and cost are different

Value versus cost. Are they the same thing? It turns out no, value is the monetary worth of (something) and Cost is the amount that to be paid or spent to buy or something. So why is it that society uses these two words interchangeably?

As consumers we have been trained to comprehend that the greater price something is the greater the value is. Although that may be true in some cases, it most certainly is not true when it comes to your business and your customers.

For example, brand name designer clothes are higher in price because people are primarily buying the brand and secondarily buying the product. The premium pricing gives a sense of belonging and satisfaction to the customer. In reality the quality may be only slighter greater if not at par with no name brands.

I for one am also guilty for “buying into” the brand. When presented with the choice of watches, I opted for the Michael Kors brand name.  Even though there were many similar options in the counter displays that cost less, none held the same value. At least in my mind.

Do cost and value always go together?

From the customer’s point of view, one would certainly hope so. Logic suggests that if a customer pays more money for something it is because the value will be greater. If the customer is focusing on the value of things, companies should do the same.

COMPANIES CAN WIN BY SPENDING THEIR ENERGY ON PROVIDING GREATER VALUE TO THEIR CUSTOMERS.

One way to do this is to change your mindset of selling and instead switch to helping customers buy.  This approach is far better because to help someone buy, your company has to create value for your customer. A great example of this is Apple. They don’t sell to us, we ask to buy their products.

In order to offer value to your customers, consider the following:

1. How easy is it to do business with you/your company?

2. How easy is it for your clients to get a hold of you/your company representatives?

3. How does the customer benefit long-term?

4. What are the risks the customer will undertake by doing business with you/your company?

5. Is your product/service reasonably affordable and market price aligned?

Remember, creating value should be the focus of your business!

Sources: 1. Stop closing sales and start providing value or lose to price – Video by Jeffrey Gitomer (above). 2. Simon Sinek – Start With Why Talk

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