When things slow down and sales drop off many business owners and marketers worry about price and arrive at the idea that .. "as times are tough people care about price, and nothing but the price."

Strangely people actually care more about value, even more so than they used to because they don’t want to overpay.

The Value Equation

Value = Benefit + Price

What this equation is saying to many is that … “if I lower the Price then the Benefit must increase in the eyes of the customer”.

I’m not so sure about this. Check out your discount tables and find out why.

More Valuable Option

The thing is, there’s another way to make the Value go up. Increase what you provide in the Benefit part of the equation.

Increase the quality and quantity and the unmeasurable pieces that bring confidence and enjoyment to the processes and products.

But watch out, because sometimes the additional add-ons can confuse people and they end up not buying at all.

Managed carefully increasing Benefits can increase your market share, while your competitors are busy increasing value by cutting Prices.

Why not take this even further and remove the Price from the equation altogether.

Free!

Until recently, practically everything "free" was really just the result of what is called a cross-subsidy: You'd get one thing free if you bought another, or you'd get a product free only if you paid for a service.

Giving stuff away for free is nice.

People like it.

And these days, you have to do it just to keep up with the Joneses.

But does keeping up get you ahead?

Obviously free doesn’t exactly pay the bills, even the big guys have found that out.

People have been lulled into the concept that demand is unlimited and that volume falls in a straight line as price rises, but the truth is that “zero” is one market and “any other price” is another. In many cases, that's the difference between a great market and none at all.

Some things to think about:

1. What’s the effectiveness of price? To lure in new customers? To solidify current customers?
2. What’s the strategy of benefits? Is your free attractive? Why do I want them over someone else’s?
3. What’s the bottom line of value? What combination on the other side of the equation attracts me?

And how the hell can you beat free?

So that’s my question:

What’s the new free?

What if that the answer is in fact the opposite of free?
The complete opposite ... absolutely blindingly expensive.

Discounting prices because everyone else is doing it, is a recipe for disaster.

Coming to grips with the balance required in the Value equation can be a challenge, but well worth persisting with.