Does a cheap price really mean cheap quality? The short answer is, sometimes yes. However, it is not always the case.
Why do some customers always relate low prices with low quality then? This usually comes down to each individual’s perception. There are many factors that contribute to each person’s perception of value. If a customer has had bad experiences with low price and low quality products in the past, then this perception is hard to turn around. Some people struggle with finances, and so the best value will always be a priority.
Then comes marketing and advertising. These things often aim to change a consumer’s perception of value and quality. Often, people are sucked into buying premium-priced products due to a brand name or label. Other times, these identical products are on sale for a discounted price, and yet some consumers find them to have lower quality. It all comes down to perception.
This becomes important when you are trying to price your products or services. Some business owners get caught up in pricing items according to how much they want to profit. Some are emotionally attached to the product or service, so their perception of its value may be way higher than what the intended customers perceive.
- The best method to set your pricing is structure
1. Understand your target market.
2. Learn about your competitors and their pricing
3. Determine your costs. If you sell products, then it’s your cost of good. If you sell a service, then it’s the cost for your time.
4. Decide where you fit into the market. Are you value-based or offering a premium item?
5. Don’t set and forget. You may need to alter pricing from time to time.
Some customers will question your prices. If you have followed a structured pricing model, then at least you can justify your prices. A well-thought out pricing structure will help you solidify your place in the market, and remain profitable!