Wednesday, August 10, 2011

Perceived Value

Perceived value is a real thing, here's an interesting story about perceived value.

In the area where I live, the vast majority of people are hunters, gun shops are big business, and 2 out of 3 Walmart stores have rifles.

But half of the hunters will not buy a NEW rifle at Walmart for $200-$300.

They will go to the small gun shops and buy a used rifle (same rifle, same manufacturer) for $300-$400 or a new one for $500 and up!

There are several gun shop owners I am friendly with. And I learned that sometimes they need a rifle fast. the customer wants a specific rifle that can be found at Walmart, but will not buy "that cheap crap"

So what does the gun shop owner do?

He goes to Walmart, buys the rifle, and sells it to the customer at the price they are expecting.

And the customer is happy!!!

Weird thing is, these same people go to Walmart for a lot of stuff they can get locally-each product is different. 

Keep that in mind when setting your prices :) If you price too low, the customer may see your product a low quality. 

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