The Value of Believing You Get What You Pay For

The Value of Believing You Get What You Pay For Choosing Value Last week I received a call from a marketing executive in Switzerland who wanted assistance with an important cover letter. He had found me on LinkedIn and chosen my company over three others. With excitement in his voice, he explained to me that as a marketer, he was fascinated by his own behavior in deciding upon The Essay Expert: He chose us because we were the most expensive company. In a similar phenomenon, for many months I had been frustrated that people were landing on my professional bio page and calling me about the service, but not purchasing. I considered removing bios from my offerings, but first decided to try raising my rates. Lo and behold, people started buying bios more often! I got the sense that they trusted they would get a better product and perhaps something they couldn’t write themselves. Of course, people do not always choose to buy the most expensive option in front of them. Different consumers have different budgets, and some people simply can’t afford to purchase more pricey goods and services. In fact, the same week I was contacted by the client from Switzerland, I also heard from a client who wanted to pay $500 for services that would normally go for $1700 according to my normal pricing. He simply could not afford my rates. And although I sympathized with his situation, I was not able to work with him and keep within my business model. Pricing Psychology If it’s true that “you get what you pay for,” expectations are set by price, and regardless of the actual product or service delivered, a consumer will value it according to what he or she paid for it. Studies have shown that people expect a positive correlation between price and quality (e.g., Rao and Monroe, 1989). In a 2008 study about wine enjoyment by Goldstein et. al., consumers who did not know the price of the wine they were drinking did not like more expensive wine better; but when they were told they were drinking a more expensive wine, they gave the wine higher ratings. It seems our brains actually play tricks on us to make us appreciate things more when we pay more money for them! This doesn’t mean that we can charge high prices and then deliver a shoddy result. If someone pays a high price for something and is disappointed, she might be even more upset than if she had paid lessâ€"although not necessarily! I have learned that people looking for a deal are often more demanding than those willing to pay for value. Choosing Clients My Swiss client was clearly guided by the phenomenon of expecting value for value. And he knew the value he wanted: the confidence that would come from having a clearly written, persuasive letter, in solid English, stating his commitment and qualifications for transitioning from the corporate to the non-profit world. He was my ideal client. He requested to pay a rush fee for a quick turnaround. He partnered with us fully in the project. And when we delivered the letter, he told us we had exceeded his expectations. In return, I was happy and willing to go the extra mile for him and give him the modifications he needed at 11pm U.S. Central time on a Friday night. He has already purchased additional services. The price-averse potential client, on the other hand, was not my ideal client. He presented with a complex situation that would have required more work than the average executive service, yet even at $1700 he would have been paying mid-level rates. Having been out of work for a year, I believe he was looking for a result that I could not guarantee: a job. For him, I believe confidence in putting his best foot forward might not have been enough, and I was concerned that he might come back asking for a refund of his $500. Every business owner when setting pricing must make a decision about what type of clients they want to target: Do you want those who are looking for a deal and will say yes because you offer one? Or those who want to pay for value and will appreciate your products and services in part because they paid top dollar for them? There is no right answer to which type of client to attract, but for me, I choose the latter. That’s my win-win and I am prepared to live up to my value proposition.