Price is a function of perceived value – yours and the client’s.

Lots of ingredients go into baking the perceived value cake, but for the most part, what you can charge for your products and services is a function of the value a buyer attaches to the purchase and you attach to your worth.

Price is a function of valueNow, what you can charge and what you actually charge is rarely the same thing. Far too many business owners undercharge because they feel price is purely a function of competition or worse they simply don’t value what they do enough to get what it’s worth.

This is as true for the Etsy seller making iPad covers as it is for the consultant providing high level advice.

In order to charge more and get what you’re worth you’ve got to take some time and get very serious about measuring one thing – value or results that a customer receives.

Here’s how to do that

Create a process that requires you to meet with every customer for something I call a “results review.” How you do this will depend on how you interact with your customers – the key, however, is to position this process as a valuable to the customer and not as research for you.

I would advise you to present the idea in the selling stages – “we know you’re going to receive incredible value and part of the way we deliver on that promise is a results review that ensures it.”

Your results review must be seen as a way for you to ensure the customer received the value promised and measure actual value. It’s also a great place to ask for referrals!

One of two things will generally happen in these reviews a) you’ll find you didn’t deliver, and that’s okay, because that’s how you fix and improve b) you’ll discover a tangible amount of value the customer received and that’s awesome, because that can act as proof of value delivered and should give you the confidence to raise your prices.

Either way, this must be considered an integral part of the overall client experience and a wonderful gauge of where you and how you get better.

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John Jantsch

John Jantsch is a marketing consultant, speaker and author of Duct Tape Marketing, Duct Tape Selling, The Commitment Engine and The Referral Engine and the founder of the Duct Tape Marketing Consultant Network.
  • Your value is what people think it is worth. So don’t under value your services because other people will judge you by that.

    “Black Seo Guy “Signing Off”

  • Love this suggestion. Am wondering what questions you recommend asking during the review? Do you have a discussion first of what value means in a tangible way? (For instance, ROI?) How do you pull out the answers from people who have a hard time articulating (or understanding) what the value meant to them? I often find it challenging to get this information from people who don’t measure results. So I decided to do something about it! I’m doing a formal marketing study called The Test Kitchen Project — it’s 3 months of learning/teaching/coaching/consulting…and most of all MEASURING results. We’ll have before and after pictures when we’re done, which will also point out best practices as well as common challenges. Still looking for participants:

  • Thanks for these tips. When you say “meet with every customer” how could this be applied for informational products that could be sold across the world. I know that survey can be done, however, I feel like with your method more information could perhaps be gathered. I don’t know if surveys to an email list will give the same result.

  • Great post!, we use a post service q & a that we do mention during the initial sales pitch, has really opened our eyes.

  • Results review – a great idea. Customer’s would love the service if they know that they would be getting what the products or services are worth. I totally agree that the results would be a good room for improvement and progress of any business. 

  • Excellent, we sell over the web Educational
    Workbooks, guaranteed to help with learning difficulties. I have to think about
    the meeting customers and adjust the system. Thanks. Tom of Jays’ Education.

  • Excellent, we sell over the web Educational
    Workbooks, guaranteed to help with learning difficulties. I have to think about
    the meeting customers and adjust the system. Thanks. Tom of Jays’ Education.

  • Yehuda

    Can you elaborate on the “results review.”?  i’m not sure i understand it.  

  • I am of the opinion that, your worth is what the buyer is willing to pay. Thats it. This applies to ‘domain name sales’ as well as it applies to human resources.

    • sure, but don’t you think you have a hand in determining what that is?

    • John’s right because two people can present the very same product to the very same customer, but one leaves the customer feeling it’s a great deal and the other leaves him feeling it’s overpriced.  

      The difference?  Are you focused on your product or are you focused on the change your customer wants to see in his life.

      • another example – my podcast is free, but some people pay $2.99 to get the iPhone or Android app version with the same info – they determined price based on the value of the delivery

    • Guilherme/BR

      Very true, but I’d say you always have an opportunity to change that perception, by showing the buyer that in fact you’re offering him more than he initially perceived. A BMW is definitely too expensive for a car, if you think of it, but I’m sure that everyone buying a BMW is doing that because they’re convinced they’re buying more than just a car. and at some point, some how they did get that conviction. I sell high added value engineering software, that are worth around $ 50k. Do you think the customers perception is that this value is too high? Always… but not so after I show them the software is worth much more for them. and it depends on me to elaborate on that perception.
      On the other hand, there’re the so called commodities. Those indeed work on a distinct logic, where there’s not much distinction amongst providers, and yes, the prices are worth what people are willing to pay, and this goes much influenced by the offer and demand as well.

  • I have found that the easiest sale is when price is not an issue for myself or my client. Our initial perceived value is high for both of us. The review allows us to assess the ‘new’ gap in those perceived values after the results have been achieved. I like the idea.

  • As someone who is just starting a business, I am having a difficult time balancing the need to “prove myself” and wanting to charge the rates I believe I’m worth. I’m sure part of this is my upbringing where I didn’t want to step out and say, “Yes, I’m definitely worth this!”, but I know I need referrals and testimonials as some “social capital”. How are others balancing these items as they build their businesses?