Perceived Value: It’s All Relative and Subjective
Here’s one of those super-secret sales truths that scientists/experts/salesmen/politicians don’t want you to know.
If you harness this knowledge, then you’ll be better at copywriting, sales and business.
The secret knowledge is that most of sales, especially of premium products, is about creating perceived value.
Sure, when we sell a product, we’re creating value in that we’re providing a service to a business. They’re also creating real value by solving a customer’s need. But perceived value is just as necessary.
The Luxury Market Is All About Perceived Value
I was researching the fashion industry yesterday. This research has prompted this article.
I found that there’s a high end designer who sells tailored yet off-the-rack men’s clothing. I don’t know how it can be tailored and off-the-rack/available to order online, but there you go. First secret: Definitions are almost entirely subjective.
How many times have you read, “The most successful X of the year?”
Don’t you wonder how that’s decided?
Anyway, this high-end, off-the-rack stuff included £100+ for a tie. £200+ for an office shirt.
This was just the “bear-essentials, thanks for your money peasant” range.
Full suits cost thousands.
To some people, that’d be obscenely cheap. I also read yesterday about a house that’s on sale with its own gold-plated bathroom floor and an indoor beach. It costs millions of pounds to buy. Whoever designed that probably wouldn’t dream of wearing a tie that only costs £100.
To other people, spending £200 on a shirt is an impossible waste of money.
These are all subjective judgements though. The fact is, the materials for building a silk tie is some silk. Even if it’s really nice silk, selling a portion of it at a huge mark-up means immense profit.
People aren’t paying for the silk, no matter how nicely it’s been cut. They’re paying for the subjective value judgement I mentioned above.
Those Evil Copywriters and Their Business Tricks
I read a funny AMA on reddit a few weeks back. It was with a direct response copywriter who wanted to help out digital nomad entrepreneurs. (Target market mistake there.)
The AMA is probably worth a post all of its own, but to put it quickly, there were the predictable, “You’re just an evil salesman selling info-products and you’re sleazy” replies. (This despite the fact he wasn’t selling anything and the products weren’t really sleazy internet marketing products.)
Then people told him his sales letters were terrible. Not because they didn’t work but because they had those salesy techniques that marketers use.
It’s a terrible argument, but it’s born of the fact that people have a subconscious understanding that value is subjective.
The steps a copywriter will go through create perceived value. These include:
- Super-duper Quadruple Guarantees!
- Check out these bonuses (worth $10022!)
- False Scarcity (Get this before the FBI take it down)
- This changed my life!
Perceived value is the ultimate determinant of whether people are going to pay a little money or a lot of money for the same product. For all people complain about premium products and scammy sales techniques, they go with the quick-and-easy over the free-and-difficult most of the time. Case in point: the whole fitness industry.
There Is No Objective Value: The Market Determines Value
A few days back, I watched this weird TV show where American junk collectors were touring Texas looking for deals.
They faced a huge amount of trouble, none of it related to any sense of objective value. Things included:
- A guy who upped his prices because they were Yankees/from the North
- A guy who simply didn’t want to sell anything
- A guy who was rich enough not to care if he sold anything
- A guy who wanted to play hard to get with his prices
On the other hand, these junk collectors bought the following:
- Rusty cars
- A washing board in the shape of a guitar
- Steel road signs
- Some light fittings
Aside from being a weird glimpse into US culture that doesn’t exist in the UK, this show goes to show one thing: There’s pretty much no such thing as actual, objective value.
How do you do business with a guy who has so much money he can literally put a price of a thousand dollars on a broken piece of junk?
How can you say something is worth $500 when some junk collector will pay $50,000 for a rusty Volkswagen with no engine or wheels?
How can something have objective value when the price can go up or down based on whether you’re a long-time friend or a stranger from a far off land?
These things all go into the perceived value of a product, and are completely intangible.
When you’re selling an item, there’s a target market that’ll pay for it. I’ve never gotten into comic books, but some of those are worth a ton of money. Objectively, they have little value. They’re designed as an entertainment item, designed to be disposable, and yet the market says the opposite. This is in some ways true for nearly every market.
Final Thoughts
A lot of people get hung up about selling expensive items or providing an expensive service. They shouldn’t.
Instead, they should understand that pretty much everything is about perceived value. If you do two things:
- Increase the actual value of your products/services (i.e. make sure they’re good)
- Increase the perceived value through copywriting and other indicators
Then you will earn every penny you charge.