Peter Baskerville, Set prices for 1,000's of products.

31 votes by Gregory Farber, Ramit Sethi, Xander Pollock, (more)

The following are examples of attributes that allow products to be priced according to their perceived customer value, rather than having their price determined only by calculations relating to their production/accounting cost. Customers purchasing products with these attributes are totally focused on satisfying a need and push the price attribute well down the list of considerations. Customers value and will pay more for these product attributes:

• Urgency - example ... Fedex "When it absolutely, positively has to be there overnight" or the 1hr photo processing being twice the price of the 24hour processing.
• Self-esteem - example ... brand name bags like Prada and Louis Vuitton or products aligned with the latest fashion, the latest social cause or the latest tech. innovation.
• Pain relief - example ... road side vehicle breakdown service like RACQ in Queensland Australia or the locksmith that opens the door for a person that has locked themselves out of their apartment at 11:00pm at night.
• Fear mitigation - example ... every insurance product and the 'stock in trade' product for most legal services.
• Scarcity - example ... Hot chips or beer at the football where there is only one outlet selling inside the stadium and it would be too inconvenient to leave the stadium to find something cheaper.
• Quality sounding name - example ... "Royal Reserve" in wine, "Gold Class" in movie tickets, "Platinum service" for online subscription or any product name that sounds expensive or luxurious.
• High emotional experiences - example ... all wedding products, special anniversary products like 'top-end' restaurant meals, exotic travel or adrenalin-rush products.
• One shots - example ... services relating to 'openings' or product/business launches like Mercedes latest car launch, this year's sport final, a one-off entertainer appearance, a famous band's last tour.
• Vital small cogs - example ... ENZED rubber hose replacement on expensive machinery in Australia or any small vital product that maintains the operation or function of a larger more expensive machine or operation.
• Sentimental value - example ... photos of your daughter's graduation or photos from a memorable cruise or any products that provide great sentimental value for the customer.
• Indulgence - example ... a shop called 'Death by chocolate' that sells products that fully honor its name or a pampering day-spar for women.

Products that fit in the categories above should not be priced according to their accounting' costs but should rather be priced according to the perceived value that they deliver to the customer - I call these additional margins "subjective margins" because the margins are achieved with a minimal increase in the underlying costs. I believe at least one of these product attributes should be included in every entrepreneur's startup business model.

Want to make a better-than-healthy margin? Sell products with these attributes.