One of the biggest struggles with selling nice to have products is feeling like you might be ripping someone off. If it doesn’t solve a problem, why should someone have to pay a lot of money to get it?
You struggle with knowing the value of your own product because you don’t know how to determine its value. You aren’t sure of the value of your own product, so you don’t know how to sell it.
You don’t want to come across as a salesman. You don’t want to appear needy or desperate. But you also want to actually make money. The purpose of business is to make money.
Do you want to know how to determine the value of your product? I’ll tell you where to start.
You are not the one who determines the value of your product.
The value of something is determined by the customer. You can determine the price, but only the customer can decide if it is worth exchanging currency for.
The moment that someone pays for an item the very first time is the moment the value has truly been set.
The value of something is determined by the amount someone is willing to pay for it.
This is because value is subjective to each person. What I value and what someone in on the other side of the world values could be (and probably are) totally different.
The key to marketing and selling without feeling like you’re ripping someone off is to align the purpose, message, and story of your product to the values of your customer.
Value is Subjective to the Customer
My younger brother Tyler loves to buy really nice clothes. He shops at Men’s Wearhouse almost exclusively, and every time I see him I take a moment to realize I’m dressed like a slob. He always looks good.
He recently mentioned that he’s waiting for a $1,500 suit to go on sale, and with that big sale comes other perks, like buy-one-get-one-free and so on. He’s very excited.
If Tyler buys that $1,500 suit for $300, he has exchanged a set amount of currency for this item, and $300 is the amount he values it at.
Someone else may buy the suit for $1,500, and because they’ve paid that amount for the suit, they will value it at $1,500. They felt the burn of that exchange.
The value of a nice to have product is determined by the amount someone is willing to pay for it, and value is subjective.
Understanding that value is subjective is a good place to start. Value exchange comes next, that is, to figure out what someone would actually pay for what you’re selling.
Researching Your Target Customer is Critical
Last year I backed a product on Kickstarter where I paid around $50 for a smart water bottle. Seems ridiculous, right? I could just drive to a local store and pick up a little knock-off bottle for $2. Why would I pay $50 for a water bottle?
I pay premium for products because of the things I value. It’s not just about having a water bottle, it’s about the benefits that come with this particular product, which includes tracking, reminders, analytics, and so on. Plus it looks really cool.
Those are all things I value. I value my time, I value understanding more about myself, I value high quality, and so I am willing to pay more for a product that offers those things.
It’s very important to understand what your audience values in their lives. Some people value a high quality product over a cheaply produced one, and other value a deal or a savings. Research is important, so don’t skip over this.
Pricing Doesn’t Have To Be Scary
I want to share some of the early stages to pricing your product, and while this list is not exhaustive, it will get you on the right track.
1. Cover your base costs.
You have to start at the place where the sale of your product will allow you to stay in business. If the item costs $5 to produce, that doesn’t mean you should only sell it for $5, because there’s plenty of other costs that go into running a business:
- Paying the bills to “keep the lights on”.
- Employee salaries.
- Packaging and design.
You’re not ripping someone off if you set the price of your product to a higher number than what you paid out to create it. This is how businesses stay in business!
2. Allow yourself a buffer.
This isn’t mandatory, but I recommend adding a few percent on top of your base costs in the event that production costs go up or something else unexpected happens.
3. Figure out what your audience values.
Evaluate what someone in your target audience would pay for it. You are the one who determines the price of your product, but your audience is the one who decides if it’s worth the cost or not.
This is why research is so valuable. Not just into competitive products, but also into whatyour customers value.
4. Price based on your target customer, not on the competition.
The easiest way to figure out what you should be charging for your product is to look at others selling similar things and price in that range. It’s also the most foolish way.
If your product meets everything your target customers value, and it’s actually providing value, you don’t need to look at the competition because it won’t matter.
People will pay more for products that align with their values than for a cheaper item that doesn’t. This is how premium brands stay in business, because they’re not just selling “yet another one of those things”, they are selling a story.
Competition is good, and analyzing your industry is fine, but if you position yourself correctly, you can easily be the go-to brand for what you’re selling.
This is how Audi can sell a car for $70,000, because they know their target customers value the appearance of luxury and a vehicle that stands apart from the rest. The car isn’t that different, but the symbol and status it provides aligns with the values of the customer.
Don’t Undervalue Yourself or Your Product
I see a lot of businesses and entrepreneurs trying to adhere to the status quo and woefully undercutting themselves. They aren’t able to stay afloat because they’re trying to compete with Amazon or Taylor Swift or Microsoft or other huge brands.
Just because you don’t have a billion-dollar marketing budget doesn’t mean what you are selling is not valuable to your customer.
I know very successful brands selling custom-designed t-shirts for $30, when I know for a fact that their per-item production cost was less than $15.
This is not arbitrary inflation: smart businesses know their audience values certain things and are willing to pay premium for it.
Keep in mind that it doesn’t matter if some people say your product isn’t worth what you’re charging for it. What matters is that the people who buy it believe it is worth what they paid.
If you understand what your target customer values and you can craft a story around your product that connects with their values, you’ll never feel like you’re ripping anybody off.
Brand, Market, and Sell Your “Nice To Have”
If you’re finding yourself still lost in the world of branding, marketing, and selling your nice to have product or service, I’m writing a book that will help you.
The book is called Nice To Have, and I’m in the writing process right now, with a launch date to be announced. Nice To Have is designed and written to help you navigate your industry, find the value in the product or service you provide, and fashion a story that resonates with your future customers.