Perceived Value vs True Value

• By: admin on Apr 10th, 2003
• Business Stuff

Anyone who has spent any time trying to learn about Internet marketing will have heard of the technique of increasing the ‘perceived value of your product’.  In plain English, this means making your product look more valuable than it actually is on your sales page, ie before your customers have purchased it.

The main ways to do this are to increase the price (people are expected to assume that a $20 product will be better than a $10 product) or offer lots of ‘bonus’ items to anyone that buys your main product.

I have never been a great believer in the perceived value argument – sure, having a great sales page may get more people to buy, but if the product doesn’t match the hype, then all that is going to happen is that you will receive a string of complaints.

In addition, I have tested pricing on several of my products and in my experience I have seen no evidence that a $27 product will sell more than the same product priced at $10 (despite what the ‘experts’ will have you believe).

I have always tried to offer ‘true’ value to my customers, not perceived value because it is true value that is important.  I thought I must be the only Internet Marketer that thought this way, but I was reading an eBook by a guy called Stephen Pierce this week and he agrees with me

(For those of you that have never heard of Stephen, he runs several successful websites and pulls in something like $50,000 A MONTH online!)

Many online marketers go for the ‘quick kill’ and charge you a high price for their product.  Many people buy the product, but if the product is poor quality, will they buy again?  Unlikely.

Now consider the reverse scenario, a customer buys a product that appears to offer great value. When they receive the product, it actually offers absolutely superb value and in fact, it is a fraction of the cost of similar competitor products!  Instantly you have a happy and loyal customer, so when you launch a new product or make a recommendation are they going to buy from you?  Well there is a very good chance that they will (stats show that on average 30% of sales come from previous customers – but only if you offer true value on their first purchase!).

I remember a saying that used to get thrown around the office when I worked in Corporate Finance – ‘It is much easier to retain an existing customer than to find a brand new one’. This is 100% true in Internet Marketing as well.

If you knew that you could sell to 30% or even 40% of your previous customers, doesn’t that make your job a lot easier?

The only way to do this is to offer TRUE value and not PERCEIVED value.

• No Comments
• Respond Here

Comments are closed.