My wife’s hair stylist informed her that she was RAISING her prices about 9%. Is my wife going to find another hair stylist? No. Is she going to get her hair cut less often? No. Is she mad about the price increase? No. Does she wish the price had not increased? Of course.
Why is all of that true? Because the value my wife receives from her stylist is still a fair value to her. Most of us improperly price our goods and services because we fail to understand the value the customer is getting, from their perspective. In this economy people are rushing to lower their prices in the hopes it will increase sales. You cannot ignore price, nor can you ignore alternatives to your offering which may be at much lower prices, however, that does not automatically suggest you must lower your price. Apple has lowered their prices because they were perceived to be too high compared to alternatives. However, they are still the high priced product in their categories and the iPhone and iPod outsell all of their competitors.
For more on value pricing you can download a paper we wrote on this a while back. And it’s free (still everybody’s favorite price).