How much will they pay for my products or services?

2018-12-20, by: Karen Stark

How you market your product or service have an impact in your pricing strategy.

To stand out in a crowded and comoditized market you must different your brand by adding extra value to your audience. This value must be both real and perceived for your customers; backed by a advantage you provide over your competitors and communicated via your marketing message.

It's your branding that allows you to charge a price much higher than the production costs and reach your maximization of profits goals.

But how much are your consumers willing to pay for your product or service?

That will depend basically on three main factors; which market share you're targeting, the maximum value they're willing to pay for for the product or service you provide and the bonus advantage you offer to basic functionality.

Once you researched your audience and defined the target customers you're going to sell to, it's in the third factor that you must concentrate your efforts wen designing your customer journey, service workflow and brand communications, including your website.

Wether you plan it or not, in the eyes ( and wallets ) of your consumers, your product/service will be positioned somewhere in in one of the five following zones in the value pyramid:



This is the starting point, the base of the pyramid where you offer the basic solution and compete with other providers of price.

The bottom price is determined by your production costs, but in order to be a sustainable business and keep the doors open, your minimum price must also include a small profit margin to revinvest in your businesss and the payment of your employees. This can be often overlooked specially by beggining service providers, that must be able to also pay themselves and cover their personal expenses separately from their business expenses, as they would with any other salaried employee.

This zone doesn't mean poor quality, and that's another good reason why it's important to cover your basic expenses right when fixing your prices; for this kind of business to survive its competiors it must be able to provide good service, clear information, trustability, client attention, speed, choice options and complete solutions to their customers.

Though the profit margin per client is small, it's possible to be successful with this model by targeting a larger customer base.

The done-for-you website building services from is positioned within this zone. It atends the demand from an specific segment of public that is on limited website budget, demands a fixed cost for website services( as a general rule, it's advisable only to talk price after gathering client's needs and communicating the value of your solution - link to future post),

There's no zone bellow this one, so the math is simple: if you're charging less than the minimum to keep going, you won't be able to deliver the quality your clients expect.

Though profit margins per client are low, it's possible to be successful with this model by targting a larger customer base.

There's no zone bellow this one, so the math is simple: if you're charging less than minimal to keep going, you won't deliver needs to see a layout before deffiing website structure, wants to choose a template and want it ready in a short timeframe.

This fast and affordable website building service is a solution that sets minimal standards and workflows to viabilize atending those market requests without compromizing quality, which is vital for business endurance. The marketing messages such as 'your own website ready before the weekend' and 'the simple and easy way to build your professional website' reinforce the value proposition of hassle-free, fast and low-cost website setup.

It delivers a complete solution that solves its customers needs and pain points.

Wether you're a product or services based business, the key takeways for being successfully work on the convenience zone and competing in price is knowing your production costs and procedures really well and communicating your advantage clearly. Otherwise you run the risk of submitting to pressure and ruining your business in race to the bottom price war against low-level competitors.



The next zone is one step further, it also offers all the basic funtionality, speed, convenience and good service from the previous zome, with consistent quality, also providing a great client experience and becoming well-known for that.

Many clients consider trustworthyness much more important than price and are willing to pay a little more for products or services from providers they trust because it satisfies a basic human need for safety.

When I worked for a bank, there were some clients that would wait in line to consult with me because they knew me already, not minding that there were more people before them even on occasions that there were other employees that could answer them imediately. They would rather wait a few minutes or couple of hours of their time than trust their money info to someone they didn`t have any prior experience with.

When clients feel anxious about yours or your product's ability to deliver on marketing promises, this creates an emotional cost for them that reduces the perception of the value they're receiving and they'll complain about price.

If you`re a service provider that delivers on a timely manner, with great quality and client service, or your product works well, solve their problem and don't lack on quality, then you will develop a reputation of trustworthyness and reliability.

The olipoly's ongoing web designer, development, maintenance and webmaster services is positioned within this zone.

It targets a different audience from done-for-you websites, more conscious of the return value and relevance of a good website for the success of their brand and/or who already know and trust Alessandra and olipoly's web design and development services via referals, previous work experience or from reading our blog posts and are ready to invest in hourly-based progressive development of their website and online presence.

It's not unusual that companies have different versions of basic products or services with added value and funtionality to atend the needs of different audiences.

If your solution saves them time, energy and provides them peace of mind, it is worth the price that you charge in relation to less qualified providers or inferior products from your competitors and they'll choose your brand irregardless of the higher price.

This goes beyond the monetary price your client is willing to invest, but also reflects on your profits in other ways, such as recommending your products and services to their friends or waiting for a booking slot on your schedule when you`re freelance professional.

Working on this zone, it's a must that you constantly monitor your processes and client services to check if it's consistently keeping up to your quality standards and reputation, but not only; you also must communicate your trustworthyness via your marketing and website, reminding your customers of why you are the best choice.


Personal reconignition and rewards

Recognizing the most valuable clients and rewarding them for doing business with you is one is one step further in customer management excellence that helps their decison-making process for closing the sale.

Differentiating your most loyal clients and clients and rewarding them according to volume spend make them feel special and create a positive effect on their perception of the value they`re getting from their purchases with you.

Banks do this very with the creation of special accounts with extra advantages and VIP agency spaces for clients with higher budgets. Those accounts have higher fees for the bonus benefits but the usually clients don`t mind the fees and rather feel rewarded by their account status.

Mireille Giulliano, in her book French Women For All Seasons, mentions how her mother's cheese, eggs, and birds merchant used to gift her family with a special supply of frogs in the beggining of summer and autumn seasons. Those were not for sale, but a exclusive treat offered to his most loyal clients and each year his visit was highly antecipated by them.

Offering prizes can also be a great strategy, as long as it makes it easy for clients to claim their prize once they achieve it, otherwise they`ll be frustrated with your market blah, blah, blah and will have a negative experience instead.

Special offers are also a interesting persuation altenative to discounting for influencing prospects` decisions to buy from you. People like to brag to their friends about the great deal they got and this a tatic that produces a perception of value without cutting your profit margin.


Personalization and increased self-esteem

The goal of this zone is to make customers feel good and little bit spoiled.

Luxury products or services that provide a pleasurable, comfortable or fun experience today are acessible to more consumers.

Natural and selected ingredients also add to add to the wellness experience.

Companies that destinate part of their profit to social causes are also included in this category, because it provides a psichological postive effect and feel good sensation in the mind of your consumers.

Besides that,the self-esteem factor. Personalisation of products and services also contribute to adding value, as people are willing to pay more custom made prodcuts and services.

This zone is the second highest in value, as people are willing to pay a fairly good amount of money for prodcuts and services that make them feel good abut themselves whenever they can afford it.



This is the highest value zone, only acessible to a small share of the market.

Status and prestige occur when one`s value is recognized by a group. Many people will pay more for a product or service that is status symbol helps them achieve this kind of public recognition.

High fashion brands rely on this need for staus and prestige to sell their products at price that is many times bigger than production costs.

When positioned on status zone, you must use the scarcity principle to your favor. the limited offer creates a higher value irregardless of intrinsic utility, value and quality, and the gretaer the demand and the lesser the offer, the higher the prices can go.

Some luxury items require that interested people have not only enough money to afford them, but also are vetted in a qualifying selection. This can be done in subtle ways such as via an intimidating empty space in a store or a long waiting list.

To purchase an Hermes bag you would need tot only the money to afford it, but also enter a list that can take over one year of wait. Though there is great demand for their their product, they keep their production small to generate a long-lasting interst in their brand.

While a waiting list and vetting process make a lot of sense for service-based businesses and are often found in other zones, for products, with exception of an unexpected demand, this usually characteristic of the status zone.

Another example of the relation beetween sacrcity and status are the wait lines for each and antecipation for each new Apple product release. Not only consumers want to have it, but they want to be the first ones to buy it before the first units prodcuced run out from stores.

The value in scarcity is linked to the prestige of possessing something special that very few people have access to.

What about your business? in which zone are you positioned? Whatever it is, make sure you`re marketing to the right audience and that website and brand reflect and communicate your brand message correctly.

Alessandra Burroughs, web designer and developer

With over 10 years of experience in Web Design, Development and Project Management, work featured on .NET magazine and an Apple Creativity Prize in WebDesign, Alessandra helps business owners and entrepreneurs promote their company's brand, achieve goals and reach their customers or audience online, being the go-to person for website maintenance, updates, optimization and webmaster tasks in general.

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