My husband and I went to buy a new dvd player for the kids on the weekend. We saw one for $75, I immediately thought there must be something wrong with it for it to be so cheap (I obviously don’t buy these things very often). In my mind, unless I was paying over $100, I did not think I was going get something of value. This is purely my perception as I have no idea what these gadgets should cost and I certainly have no idea where $100 comes from.
Funnily, this is exactly how many people process the whole value vs cost equation – they do it in their own minds using their own perceptions, rightly or wrongly. My husband thought I was strange and disagreed with me (funny that?)… he thought $75 was an awesome deal and represented value for money. After he spent a couple of minutes highlighting why he believed it represented value for money, and why it was the solution we needed, I succumbed and we bought it.
What did I learn from this experience?
You always need to be aware of what price does to people’s perception of value. This rings true even more so in our advice world where what we are selling is intangible. If you are too cheap, people will be suspicious (as I was). If you are too expensive, people will go elsewhere. So, if we really want clients to understand and agree to pay our fees and ensure we get paid what we are worth, we should not waste time justifying our price or using price as a means to get clients to sign up. Rather we should invest our time and energy into helping increase clients’ perception of the value they will or do receive from the advice we provide. It is a deal breaker.