“Price is what you pay, value is what you get” Warren Buffett famously said. Value is not tangible, it is a perception. That is why bottled water, handbags and many other products are sold in such a wide price range.
You might actually be doing your customers a favor by charging 10x more than your competitors. A study found placebos work better when the patient is told a pill costs $2.50 than when told the same pill costs $0.10.
When we are confident something will work, it is a lot more likely it will. And when it does work, even if it would have also worked with another product, we attribute it to the value provided by the premium option.
So there really is such a thing as reassuringly expensive. If something costs a lot more than other products in the same category we assume it must be better. That is why we appreciate an expensive wine more than a cheap one.
Price can be a big factor in helping your customers succeed. Use it wisely so that everyone profits.
