Home » Business & Finance » Small Business » Perceived Value

Perceived Value

© Bert Markgraf

Your small business makes product A and it costs you X dollars to make. You add your profit Y and try to sell it. If you're successful, you make the profit times the number of units you sell. Traditional sales-oriented company.

Your small business thinks it sees a need in a market which is easily accessible to you. You survey your target market to confirm what is needed, where your contribution of value can lie and how much your market is willing to pay for this value. You then design a product within the required price range which satisfies this need. Traditional marketing-oriented company.

You find that your competitor across town is selling essentially the same product but at twice the price. Not only that, he's got a bigger market share. He's probably selling perceived value.

To get at the perceived value concept, you have to analyse your market in terms of what your customers value. For lower end market products this might be something like security or getting a good deal. For upper end markets it might be saving time. Once you have an idea of what it is that is valuable to your market, besides the direct qualities of your product, you can position yourself to build additional features into your customer relationship which provide this additional perceived value.

The key here is to do something that costs you relatively little but which makes life a lot easier for your customers. It may be putting coffee and donuts in your reception area. It may be offering free same-day delivery. It may be offering in-home service or extra warranty. It should not have an extra cost to the customer attached to it and your target market must perceive it as having value. Some of the most effective features actually have little real value but make the customers feel good or make the purchasing experience more fun. Now you can charge twice the going rate just like your competitor across town, make piles of money and still have satisfied customers.

The last sentence above is my small attempt at extra perceived value in this article, adding humour to information, with the goal of encouraging more readers to return next week. So is this paragraph. I've also doubled the price of this column.

For a more detailed analysis of value, try this link.

The copyright of the article Perceived Value in Small Business is owned by . Permission to republish Perceived Value in print or online must be granted by the author in writing.