160. Baking it Down - Price vs Value Prop

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💸 Price vs Value Prop - Value is relative(ly easy to manipulate).

I was watching a YouTube video featuring a TedTalk where a salesman asks a member of the audience for their pen. He then asks how much the person bought the pen for. "Five dollars," the guy tells him. The salesman then asks if anyone in the audience wants to buy his newly acquired pen for $5 bucks.

✍️ The salesman then says he's going to take the pen and drive it to a ritzy part of town to an expensive jeweler where he's going to place the pen in a mahogany wooden box lined with velvet and place it in a glass case and point a spotlight at it where you can only view the pen with the assistance of an employee who will unlock it from its secured cabinet. 🎁

The salesman asks, 🤔 "Do you think the pen would still be worth $5?"

The resounding answer was that the very same pen that was worth $5 is now worth more. Why? ✨The value changed✨ - even when the pen didn't. The more value we create, the higher the price point we can set.

💎 Consider the diamond-water paradox when thinking about value vs. price. 💧

Diamonds are far more expensive than water. The price of tap water is negligible and the average price of a 3-carat diamond is $41,395 (according to Google's AI). 

But... ☀️ consider the shift if you were stranded in the desert, starved and dying of thirst. 🥵 Diamonds become worthless when your life is on the line, and the ✨value✨ of water has increased exponentially. While neither water nor diamonds changed - the situation around them did. 

And value, the subjective worth of an object, increased the price of water and decreased the price of diamonds (to the desert dweller at least). 

🤔 So - how do we apply this price/value concept to your bakery? 

Increase ✨value✨ so you don't have to compete on price. This means adding value to everything around your product - your packaging, your photography, your customer experience, your response times, your availability, your product line, your return policy, etc.

Then raise your prices. Why? 🧠 We simple-minded humans associate high value = high prices. 

A good indicator that your "value proposition" needs some polishing up is if you're getting a lot of price objections. The value isn't at the forefront yet, so they focus on price. Once you get your value proposition dialed in, price pushers will become a thing of the past. 

👂 Snag this podcast on any major podcast player (Spotify, Apple Music, Audible, Amazon Music, or your desktop) by clickin' here - Episode 160 - Price vs Value Prop.