What is Your Product Worth? Daniel’s Marketing Lesson #5
What is your product worth?
The simple answer: Whatever someone will pay.
The complex answer: The Goldilocks’ price. Not too much, not too little.
When blue jeans were first introduced in Japan the manufacturers wanted to create a market. So they priced the jeans at $5.00 a pair. They were a bargain. They didn’t sell. They took them off the market for a time then reintroduced the jeans at $25.00 a pair. They sold out.The buyers figured at $5 the jeans weren’t worth much. But if they were $25 a pair they must be a must-have item.
You’ve heard the cliché, perception is reality. It’s often true, especially in marketing. Most people understand private labels. Stores contract with a supplier to have a product manufactured, then put their own name on the packing.
Let’s use frozen vegetables, and the Safeway chain of grocery stores as an example. Safeway has their own brand of frozen corn, peas, carrots, etc. Next to Safeway’s brand are the national brands. Which cost more? The national brands, of course. Is the corn in Safeway’s bag or can identical to the corn in the national brand’s bags? Of course. Do the people handing out extra money for the national brand think the national brand’s corn is better? Of course. Is it better? Of course not.
But that’s marketing. That’s figuring out what your product is worth. Some people are willing to pay for the brand name on the packaging.
There isn’t time to go into all the complexities of how to figure out exactly what your price point should be. But to start ask these questions:
Who is my target? Upscale? Then I can charge more. The masses? I’ll need to charge less.
What do people think my product is worth? Take a survey. Ask friends, neighbors, people waiting at the bus stop. Set your price and start selling. The market will quickly tell you with real dollars what your product is worth.
Daniel figured it out, so can you.
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