A Price-Value Matrix – A Cool Tool for Finding Your Just Right Pricing Strategy
While developing your pricing strategy, it is important to remember that there is an implicit relationship between price and value. We expect to pay more for gourmet food than for fast food and for a luxury car than for an economy model. At the same time, value is a matter of opinion, not fact. I prefer a new Subaru to a ’95 Cadillac; my husband prefers the opposite. His wardrobe is built around Dickies; my taste runs to rather more eclectic (and non-synthetic) clothing. Given that there is a relationship between price and value and that value is a matter of opinion, I had always priced my products and services by triangulating three factors: what I wanted or needed to earn, my costs, and what the market would bear. That’s what I had taught countless other people to do, and it worked fine. All else being equal, quality, price, and market generally reached a dynamic balance where prosperity and service overlapped.
But, once came the day when something felt out of synch in the way I used that marketing strategy, and I felt some gritchiness around the prices of products...
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