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Cost and Value

When I was younger there was a popular saying that described someone as "knowing the cost of everything and the value of nothing"; usually directed towards those that were a little too fond of money without regard for the valuable but less tangible things in life. It popped into my head recently during a discussion with a business owner about pricing and the bald statement that "our customers are only concerned with, and buy, on price". It was delivered in a way that invited no discussion or a slightest indication that any evidence would bring about a radical change of opinion. My first thought was you can’t reason people out of a position they didn’t reason themselves in to. The second, what evidence could I produce to challenge this assumption. I made a few game attempts but they all fell flat. The third, I felt sorry for this business owner and his business because if that’s the basic assumption underpinning their strategy then that will be the type of customers they’ll attract. They will be locked in a desperate spiral of cost cutting, margin trimming and deteriorating service until someone will come along, because they always do, who can do it cheaper. The truth is that the vast majority of customers don’t fall into this category. They do understand the difference between cost and value. The key is that your messages, offering and branding in the widest sense communicates the exceptional value you provide. If everyone was a price buyer when they went out for a meal then every restaurant would be McDonalds. The fact that restaurants of all kinds from fast food to Michelin star are surviving indicates that people are willing to pay for value. In successful "expensive" restaurant the messages, branding and whole experience communicates the value they provide.