Last week, NPR’s This American Life had an amazing episode about money, or rather, its invention.
At one point, they talked about how a retailer got rid of a jar of olives that was not selling not by discounting its price, but by raising it. To eight dollars. Naturally, the jar was sold within hours, its perceived value ratcheted up. It’s kind of funny how a perceived value can be added to a product just by raising its price.
Conversely,a low price may end up denoting a cheapened value, even if it’s attached to an iPhone that’s $49.
Of course, in these economic times, it’s tempting to just lower your price to increase sales, but even Apple realizes that it’s only lowering prices on those items that are no longer its hottest items (the $49 iPhones are older models).
In the bookCheap, author Ellen Ruppel Shell warns against cheap goods, partly because a low price can devalue what makes it special to begin with. You’d be suspicious of a thirty-cent jar of olives, but surely an eight-dollar jar of olives must be special, rare, and valuable, right?
Think about your business’ pricing models. Do you discount too deeply, almost giving away your best products and thereby cheapening your entire catalog of goods? Or do you price it fairly and reasonably, giving your goods or services the respect and profitability they (and your business) deserves?
Remember: just like The Price Is Right, it’s just as important not to undervalue your worth as it is not to overvalue it.