What You Sell Is Not What They Are Buying

violinWhy would people pay more for something that is provably the same as another thing that is less expensive? Two pairs of jeans can come off the same production line, one gets a “private label” and the other a “designer label,” and people will pay more for the designer labeled product. Clearly they value the label and the cachet they perceive it imparts. Why else would you wear the label on the outside anyway?

However, that strategy is not universally true. Many years back General Motors was “found out” for building virtually identical cars and putting different brands on them. This tarnished the perceived value of the supposed higher-end brand. They then changed their approach.

Could be that if people were made broadly aware of the identical-ness of their beloved jeans in my example above, it would tarnish that brand too.

All that being said, people buy more than the “thing” and even if you show them their choice is “wrong,” they are likely still going to make the same one. I was reminded of this again in reading about a recent study published in the Proceedings of the National Academy of Sciences. The journal reported on a study of violin choices by world-renowned violinists. Most, if not all, master violinists would love to own an 18th century Stradivarius violin. These “gold standard” violins are believed to be superior, for unknown reasons, and can command millions of dollars when sold.

The study reported that in a controlled, blind test in more than one playing environment, violinists actually chose new violins over the Stradivarius most of the time. They felt the new violin was a superior instrument.

Can we expect this valid, repeatable study to diminish the value of the Stradivarius and cause violinists to choose the new violin over the Stradivarius given a choice? Can we expect the market value of the Stradivarius to drop? I doubt it.

It may seem to be irrational to pay more for an 18th century instrument, which is provably inferior to the newer instrument that costs materially less money. But to believe that you show a lack of understanding of what is being bought.

If you want to get higher prices for your products and services, stop being rational. People are irrational about their pricing decisions, but they are predictably irrational. And one thing is flat-out true: People will pay more for what they are buying than what you are selling.

This entry was posted in Pricing, What and tagged , , , . Bookmark the permalink.

1 Response to What You Sell Is Not What They Are Buying

  1. Pingback: Make More Money By Selling What They Are Buying | Value Acceleration

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