|
"Cost" and "Price"
Price is not what something costs, it's what it's worth to the buyer. Suppose your price for a high performance indoor air purification system is $3,000. To many buyers,  that costs a lot. But for prospects that suffer from asthma or allergies, $3,000 may be a bargain!
Most of us with children who suffer from respiratory ailments would value that $3,000 air purifier over other options. Nurturing and caring for our kids is a priority, and while we may put ourselves on a budget, that budget can disappear when our kids are involved (just look at the cost of weddings!)
The social aspects of an item affect the item's worth to the buyer. What will the neighbors/friends/peers think? Rather than the indoor air purifier, some buyers will invest that $3,000 on an upgraded entry door system. First impressions are important!
How does having that item make me feel? That same $3,000 might be spent on a steam + convection oven. Is she a gourmet cook and enjoy entertaining? Does she take pride in healthy eating? Does  she feel she deserves that oven?
How much risk is involved? Would that $3,000 be better spent on a super insulation package (how much would that really save on utility bills?) or switching to a contemporary fireplace (you like it, but it's certainly not for everybody!)
Price is not what something costs, it's what it's worth to the buyer. Knowing what your prospective buyer values is a strong predictor of what they will spend money on. And, it helps you establish a fair price. Buyers are reluctant to buy if the price doesn't feel fair.
Value. Social aspects. Self-image. Risk. Fairness. Those should be the true influencers of your pricing. Yet most builders simply take the cost they pay, add a standard markup and that's the price the item is offered at. As Seth Godin puts it, "Cost isn't abstract, but value is."
| 
