Price-Value Matrix: Is The Price Right?

While developing your pricing strategy, it is important to remember that there is an implicit relationship between price and value (find a cool tool for making out your "just right" pricing strategy at the end of this article - Price-Value Matrix.) We expect to pay more for gourmet food than for fast food and for a luxury car than for an economy model. At the same time, value is a matter of opinion, not fact. I prefer a new Subaru to a '95 Cadillac; my husband prefers the opposite. His wardrobe is built around Dickies; my taste runs to rather more eclectic (and non-synthetic) clothing.

Given that there is a relationship between price and value and that value is a matter of opinion, I had always priced my products and services by triangulating three factors: what I wanted or needed to earn, my costs, and what the market would bear. That's what I had taught countless other people to do, and it worked fine. All else being equal, quality, price, and market generally reached a dynamic balance where prosperity and service overlapped.

But, once came the day when something felt out of synch in the way I used that marketing strategy, and I felt some gritchiness around the prices of products I recommended. I kept examining my assumptions, and everything seemed right. Still, the feeling that something wasn't quite right persisted.

Never one to ignore an itch, I kept scratching until this week I realized what the problem is. I had been using quite different "markets" to assess what the market would bear. That is, I'd been looking at markets that had different values from the values of many of the people I attract. I based my pricing strategy and marketing on the proven best practices of other respected "info product" gurus, but those practices were designed to address the values of people who didn't, and probably never would, be attracted to my e-zine.

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