When it comes to price vs. value, we’re used to putting a number to the price. After all, that’s the number our customers ultimately are going to pay and the number that we can plan our revenue goals around.
However, we’re not accustomed to putting a price on the value for our own products or offers. Or, if we do, we’re not entirely sure we’ve nailed down the right number.
We may see messaging like, “but the value is so much more!” Or “over the course of a lifetime the value is infinite!” But these messages do not provide an anchor point for our customers—and that’s a massive miss.
Defining Price vs. Value
First, let’s make sure we’re on the same page when it comes to these terms. Price is the amount your customer pays. This is the money being exchanged for the offer.
Value is what the offer pays the customer. This may be literal payment in financial terms. For example, our copywriting course allows people to build copywriting careers. That has the potential to net these students hundreds of thousands of dollars (frankly, millions) over the course of their career.
But the value can also be emotional. For example, if your offer teaches customers how to present in front of crowds with confidence, there are significant emotional gains tied up in the value of that offer.
Or value may involve physical conditions. For example, maybe your offer helps customers define and craft a healthy lifestyle. Often, there’s a time component. Perhaps your offer saves customers time in that they don’t have to figure sometime out themselves. Or implementing the lessons of your offer will save them time moving forward.
When you dig into it, you may find the value of your offer overlaps a few of these buckets.
Nailing Down Price vs. Value
If value is such a malleable number, why do we even bother with value versus the actual price? First, because your offer is worth so much more than the cost!
For example, if you have an offer that costs $597, but most people who buy it have the opportunity to 10x that number, then then your offer is worth at least $5,970 (and likely a lot more if it’s filled with tools and tactics your customers can continue using indefinitely).
You need to convey that value to your customers—it makes the purchase feel so much more worthwhile and urgent. In fact, you’re doing a disservice to your offer if you don’t convey its value—both in terms of messaging and in terms of currency.
Of course, because numbers are so malleable, you’ll need to spend some time considering the value of your offer. Some points you can consider:
- What is the potential ROI of your offer? If it helps focus your thinking, consider the ROI for someone within the first few months or even first year of having access to your offer.
- What is the value based on all the time (and energy, and knowledge) you put into creating your offer?
- What do your current customers say? For example, a customer for one of our courses shared that he 100-xed the value of the course—within the first few months!
The Power of Price Anchoring
The goal of price anchoring is not to show a fake price and then a lower sale price. The goal is to ensure people understand their purchase is worth it.
Without context, these numbers are meaningless. Money, in general, means nothing without context.
A $300 price doesn’t mean anything unless you know whether that is the cost for a loaf of bread or a 12-person, eight-course gourmet meal. If it’s the former, you’d balk: what’s in the bread that makes it worth $300? If it’s the latter, you may think it’s an incredible deal!
Putting a number to value helps give context to the cost of a product or service. It helps customers understand just what a deal this offer actually is—and gives them a high mental anchor point that makes the actual cost of the offer sound so much more reasonable when you present it.
This means, of course, that you need to present the value before you present the cost.
Your customers need to understand that the value is so much greater than what you’re asking them to pay. Then, when presented with the price, they can see your offer as the valuable investment that it is.
On episode 20 of the Energize Your Online Business podcast, Nicki and Kate are digging further into why value-based pricing is one strategy you can’t skip. While there’s no magic formula to nail down value, listen in for practical ways to approach determining the value of your offer.
Have you put a number to the value of your offer? Why or why not? Share in the comments below!