There is a special formula to determine the best price for a product. The only problem is, no one has figured it out yet.
In theory, there is no preferred pricing method. Both discount and premium pricing techniques are considered to be viable strategies.
However, many entrepreneurs seem to prefer utilizing the premium pricing approach when pricing their products. Their argument is that you don’t have to compete with the larger, more efficient companies on price, but you can enjoy a higher profit margin.
In order to justify pricing your product higher, you need to offer a good that is very high in quality.
How does one do this? There are many different ways to add caliber to a product since quality has a lot of different attributes. Below are some useful ways to add a tremendous amount of value to your product.
Make it reliable
A great way to create a high quality product or service is to make it extremely reliable.
Reliability is a very powerful way to add quality because customers will pay top dollar for reliable products, since they feel they are getting a lot of value for their money.
A product that is durable, long-lasting or fail-safe is considered to be reliable, while a service that consistently performs in an expected and outstanding way is also said to be reliable.
Customers perceive a lot of value in reliable products or services because they feel they will offer longer-lasting and dependable benefits, where its stability will pay for itself rather quickly.
You can establish a highly valued product by creating an item that is longer-lasting, more durable or more consistent than the rest of your competition.
Make it luxurious
Customers also find quality in a product when it is considered to be a luxury item.
Consumers are willing to pay a premium for luxury goods because they feel there is a sense of indulgence when using this type of product and that it is superior in convenience.
A product that is more accommodating, offers greater comfort or is better tasting is considered luxurious.
If you can develop your product to be perceived as a luxury item by offering greater accommodations or comfort than competing products, consumers will be willing to pay a steep premium for what you offer.
Make it a high performer
Customers will pay a large premium on a product or service that can complete a task far better than any competing product. It may work faster, more efficient, deliver more power or accomplish its promised task in any outstanding way.
For example, Bose is considered to be one of the best speaker systems out there due to its advanced surround sound. Because of its stellar sound quality and theatre-like experience, Bose is a great example of a product that offers top performance.
Think of a way your product can perform as promised far better than competing products. There will always be a set of customers who are willing to pay a lot of money for the product that is considered to be the best.
Give it status
Products frequently serve as a status symbol and consumers will often pay a huge premium to feel like they belong.
Status can be in the form of social class, niches with specific interests, beauty or fashion.
For example, buying a certain brand name or high quality product might suggest that an individual belongs to a “higher” social class. Owning a laptop running Linux might infer that someone has tech-related interests or wearing a certain name-brand clothing may position someone as fashionable or good-looking.
Products often give the consumer status in that they carry the promise that the user will have a certain feeling of affiliation or positive perception in the eyes of others.
Therefore, if you can create a product that suggests a certain social class affiliation, offers greater beauty to the user or is considered more fashionable or trendy, consumers will be flocking to your product and will pay any price for it.
Make it innovative
Some consumers will always pay a high price for cutting-edge products because they will continually want to stay on top of the best that technology has to offer.
These types of customers are called “early adopters”.
Early adopters will pay a steeper price for a product when it first comes out. They realize that the technology is new and experimental, so they expect the pricing to be higher.
Consider the cost of first iteration of the iPhone. Its $600 price tag was targeted to all of the customers eager to be the first to try out this new product. Then, to entice the more casual users and later adopters, the phone slowly came down in price and is now at a drastically lower price of $200.
By creating a product utilizing new and experimental technology that few other competitors offer, certain customers will be lining up, expecting to pay a large amount for it.
Give it more features
Products are often considered to be of high quality when they have a large repertoire of features.
Adobe Photoshop is a perfect example. This product is considered an industry standard in image and photo editing because of the sheer amount of features and tools available to the user for editing images.
Thus by creating an item with a larger amount of features than competing goods, you can charge a greater price and enjoy an even larger margin for your product.
Save the environment
Customers are demanding more and more eco-friendly products because of the positive effects it has on the world around us. Consumers are often willing to pay extra for green products because they want to do their part to help the environment.
Build your brand
Some brands have an overall great reputation associated with it and will command a high premium simply because the product has their hallmark on it.
A brand is frequently considered valuable because it offers products high in other quality factors.
Clothing companies are a perfect example of this. Often the brand name generates value because it is considered to be trendy or fashionable. If a company can consistently produce trendy clothing, the brand itself will become fashionable solely due to the company name.
If your brand can command such a perception, you will have the ability to set the standards bar as high as you want and as a result, charge as much as you want.
Offer better customer service
While the level of customer service might not have a direct effect on pricing, it certainly will create more value in the eyes of the customer. This can create more loyalty and tolerance for higher prices.
Inspiring loyalty in your customers is very powerful, as it will bring repeat buys, more profitable sales and even referrals. This makes customer service a quality attribute that cannot be ignored.
Can you think of any other quality attributes that can justify charging a higher price for your product?