How Much Does it Cost – or How Much is it Worth? Market Your Value, Instead!

How Much Does it Cost - or How Much is it Worth? Market Your Value, Instead! via @scalablesocial http://scalablesocialmedia.com/2014/06/market-value-not-price/About a week ago I dropped my iPhone. From about four feet up. Straight on to the concrete sidewalk. I had a “Schrodinger’s Cat” moment. Please don’t be broken, please don’t be broken…

Well, it was. Smashed. In a very pretty spiderweb pattern, but smashed, nonetheless. First thought, “Crud!” Second thought, “How much money did I just cost myself?” And then, “Am I going to have to buy a new phone, or are there people who fix these things?” Yeah, you probably already knew there are lots of places that fix them, but this was my first phone-smash.

Somewhere in the Googling, phone-calling, fingertip-slicing days between smash and fix, I did have to wonder – what is it worth to me to get this fixed? Leaving it as it was was not an option – little pieces of glass were starting to fall out and I knew I was leaving it open to water damage. Not to mention the finger-slicing hazard. But, should I fix this phone (a hand-me-down iPhone4 – I’m cheap) or get a new one. Well, I already mentioned my cheapness (which I prefer to think of as bargain-hunting-prowess, thank you very much). So, $79, a new carrier contract, or $649? Easy choice. Well, mostly.

How Much Does it Cost – Or How Much is it Worth?

A replacement screen for an iPhone4 costs approximately $9 online. Many repair shops advertise a 30-minute turn-around time. So, let’s figure the technician is paid $20/hour and overhead accounts for another 100%. That works out to be approximately $29 worth of parts, labor and overhead on a $79 repair bill. No, I’ve never run a cell phone repair shop, so I don’t know that that is even close, but you get the point!

Why People Don’t Just Do it Themselves

Usually I’m up for a DIY project. BUT THIS IS MY PHONE. My lifeline, my business, my connection to my friends. You know I’m not being overly dramatic here. Then there’s the matter of the broken glass. I need my typing fingers whole. Add to that the possibility of completely destroying the phone, and the answer was clear. What the repair cost was kind of a lot. But it was also completely worth it to me.

But Wait, There’s More!

The shop I chose also offers a lifetime warranty on repairs. I don’t think that means they’ll fix it if I run over the phone, step on it while wearing tap shoes, or use it to fend off an attacking gator. In fact, I don’t have any idea what the warranty means. The details didn’t matter too much to me. It just made me feel a little more confident doing business with them.

Why Figuring What Your Product or Service is Worth is More Important than Answering What It Costs

Lots of people have figured this out. This is why “price-gouging” laws have been enacted. A gallon of fuel on a day when it’s the only gallon of fuel available in a 100 mile radius is worth a whole lot more to a stranded motorist than on any other day. But, we’re not talking about being a creepy opportunist.

Let’s say your Pinterest strategy and setup service (just for example :)) takes you about an hour with the client, three hours for strategy, five hours for setup and another hour for training. Should you just figure out how much that costs you in employee wages and mark that up a bit? No! And why not? Because that is selling on cost and feature rather than value.

Consider the Value to Your Ideal Client

Forget the people who would rather do it themselves. For them, your product or service, in this case Pinterst Setup and Strategy is worth nothing. Instead, focus on the person who needs your service and the value that service provides.

By hiring you to do the work they are getting:

  • A professional strategy,
  • Gorgeous product (here, optimized profile and boards),
  • Training,
  • Time-savings.

Remember, the time saved here is not just the number of hours you are spending, but includes the number of hours it would take them to learn the platform, learn how to do the strategy and set up the account. You know how long that takes! Then there is the value of your own accumulated experience. Don’t forget about that!

How to Present Value

Of course, you need to tell your customers what product they’ll get and you’re going to do (although in the case of ongoing management it should be understood that things are subject to change as it becomes clear what is working and what isn’t). Many businesses also find it beneficial to list pricing, or at least a price range on their websites. However, the focus should really be on the value you will deliver.

Will your new service bring new leads and customers to the customers’s website? Will your 50 years of experience with tax law mean they’ll get the best refund and no audits? Will the product improve their car’s gas mileage? Will it restore their iPhone to like-new condition, protecting it from water damage and stopping sliced-finger syndrome? Talk about that. It’s the “What’s in it for me?” answer.

Don’t forget the “Wait, There’s More!” bit, either. There’s a reason informercials use that strategy. You don’t have to actually say it, but you should give them reason to understand all the value behind your product or service. Do you offer benefits that aren’t actually part of the product or service itself? Examples include a money-back guarantee, free shipping, free technical support.

Oh, by the way, this blog post is part of the Word Carnival. Each month, a bunch of us small business owners get together and blog about a timely business topic. This month’s topic is “How to market your value and not your price.” Be sure to check out the other blog posts in the series!


Summary

Article Name
How Much Does it Cost – or How Much is it Worth? Market Your Value, Instead!
Description
Business owners hear "how much does it cost?" all the time. Whether it’s a product or a service, the answer needs to start with how much it’s worth to the right person.
Author

About the Author Alisa Meredith (311 Posts)

As co-owner and chief inbound marketing consultant at Scalable Social Media, Alisa Meredith spends a lot of time keeping up with online marketing trends for the benefit of our customers. Computers have been a passion of hers since her first T1-99, so inbound and social media marketing is a natural fit.

Comments

  1. Alisa thanks so much for this article. Really love the analogy of your I phone to address key issue of marketing the value of the services.

    My take away is the need of businesses to offer other benefit outside of the service such as money back guarantee

    • Alisa Meredith

      Thanks so much for stopping by, Peter! Glad the story resonated with you (I think most of us can relate!).

      Well, that’s part of it, but the key really is to not think so much about cost when you’re selling and even pricing your services – think about the value you provide instead. Help people to see that and you’ll never have to compete on price again. Cell phone repair folks don’t really have to sell the value – we all pretty much freak out when we break our phones and would do just about anything to get it back! 🙂

  2. I love a true story! But I’m sorry about your phone. 🙁 Yeah, “whole fingers” are kinda important. LOL

    I think price wars are crazy. Car dealerships, grocery stores, and airlines come to mind. Sure, who doesn’t want to save on airfare, right? Especially when you have that all-important speech to deliver in St. Louis and you live in Los Angeles. But what are you actually getting for the price? For super-saver deals, you oftentimes have to agree to fly “stand-by”. Big yuck. And what an inconvenience … not to mention a big fat chunk of stressfulness hoping to reach your destination on time.

    Your message is a smart one. Show your prospective customers or clients what’s truly “valuable” about your products or services. Not the price, but what they will gain from doing business with you. Think about what some women invest in cosmetics. It’s insane! And yet if spending $60 on a facial cleanser gives them the results they’re looking for, they’ll buy it. And they’ll keep buying it as soon as they run out.

    There’s far more to marketing than price. Great post, Alisa!

    • Alisa Meredith

      I love your airfare analogy, Melanie! It’s definitely about what is valuable to us, saving time, fingers, face. 🙂 Great comments as always!

  3. Thankfully, I’ve never broken a phone (knock on wood). And in my area, I see iPhone repairs advertised at $49. But still. You’ve made a huge point and that’s the fact that price does still play a part in our buying process. Even when we understand all the value. The key here is to connect with the right people — the ones who aren’t DIY — and help them get a clear picture of the beauty of working with you.

    • Alisa Meredith

      What? $49 would’ve been nice! 🙂 Thanks so much for stopping by, Tea. Price is always an issue, but it shouldn’t be the only one!

  4. “Focus on the person who needs your service and the value that service provides.” Yes! Sometimes we get so hung up on our value that we forget we’re only valuable if someone wants or needs our services!

    I call your iPhone story the “throw money at the problem” approach. That’s pretty much what I do when the “cost” of doing something is too high in terms of my time, energy, effort or just lack of qualification. Like painting my room. I hate painting. It’s worth throwing money at the problem just so I don’t have to do it, even though I know I could, for free.

    So we just have to find those people who “value” the service we provide!

    • Alisa Meredith

      I just saw a quote on Facebook that read, “If you can fix it with money, it’s not a problem.” Well, I don’t exactly agree with that, but anyway… I’ll paint your room if you fix my phone :).

      Thanks for stopping by, Carol Lynn, you always add something awesome!

  5. Great story, Alisa. I especially like the bit about “the value of your accumulated experience”. That’s huge, especially when you’ve been in the biz for a while. When you start to think that it’s taken you 5 or10 or 20 years to get to the point where you know just what to offer a client, it puts a whole different spin on the question of value.

  6. I’ve said it before and I’ll say it again: it is *so* much easier to work with a client who already understands the value you provide. But how did that client get to that point of understanding? Experience, most likely, or self-education. For the clients that need a little bit more persuasion, education is key—having a website that clearly shows them the value that you provide (something that I need to work on), for example. But price still plays an important factor in their decision-making process, so it can’t be completely ignored or inflated. Great post!

    • Alisa Meredith

      Thanks, Molly! It is hard to find the balance, isn’t it? You want to sell the value, but of course price matters. Oh, and yes, those clients are wonderful!

  7. I feel your pain Alisa. I dropped my phone on a plane, and didn’t realize it until after I was off the plane and through immigration (international flight). I would have paid a lot of money to get that phone back – not just for business, it had irreplaceable pictures of my 5 year old on it that I hadn’t backed up. If there had a been a service at that airport that guaranteed getting my money phone back or no fees – done.

    While I try to bring this out in my own sales copy, you’ve illustrated how I could do it even better. Thanks!

    • Alisa Meredith

      Oh no! I’m so sorry about that! I have my photos go to Google Plus as a backup, but I don’t think they always do. I take it you never saw it again?

      Glad you found something useful here. Thanks for your comment, Nicole!

  8. iPhone screen replacement is about as sexy as Carpet Mill, and stays exactly about as high in people’s awareness of products and services until that one day when they drop their phone JUST RIGHT.

    And in fact, looking at this from the other direction: the cost of your iPhone was, what $300? The value of it after having its screen smashed was something entirely different… like $5, right? Because it was about as useful as a paperweight.

    You can spend all sorts of money on a fancy website, too – $5,000 is the average nationally. If it goes down (or was put on $5/mo hosting)… your website is worth precisely zilch until it comes back up (and in fact, might be worth negative dollars at that point).

    The “what’s in it for me” is really hard to articulate if you’re in a niche market, though – and especially in an “emergency niche” market wherein you only get a call if there’s a problem. Urgency definitely works against you in that case as the marketer (rather than for you) because there’s so many “viable” alternatives and you have got to be able to articulate your value in a heartbeat.

    Nobody cares how comfortable the waiting room is in the hospital, but it sure becomes an issue if you expect folks to visit you for longer than 5 minutes.

    • Alisa Meredith

      Nick, I loved the way you turned it around. I agree, showing people exactly what is in it for them is tough. In an emergency it’s often a matter of who or what you see first and what is most convenient. Great comment – thanks!

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  1. Value and Price: What’s Your Work Worth? | Word Carnivals

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