Companies with a strategic plan generally compete within a certain target market for their clients. Price is one of the main points where companies differentiate or provide value to their customers. Think of the example of the jewelry department Wal-Mart where everyone knows the cheap prices attract customers who are trying to find the lowest price. The quality of the products is not the best but the customers want to save money by purchasing at the lowest price. Let’s compare Wal-Mart to Tiffany’s Jewelry. Just the blue bag from Tiffany’s has a high perceived value. The quality is one reason Tiffany’s is valued higher. The customer experience at Tiffany’s is beyond compare. The company is seen as an expert on diamond jewelry creating higher value for their product. The two jewelry departments both sell jewelry but the exclusivity and the perceived value for the two stores are vastly different which account for the difference in price. No one would expect to pay $30,000 on jewelry at Wal-Mart.
This difference can be applied to any business by asking the question of what type of client is your firm attracting? It is for a business to price themselves out of a market by overpricing as well as underpricing. There are some factors that play into your clients such as the target market. If you are providing a high value service having a low price might be chasing away clients. At least once on an annual basis every company needs to take a look at their target market and their core competency to make sure their pricing structure is attracting the right client. The consultants at Novilex Consulting Group provide services to ensure your perceived value is in line with your pricing structure.