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How can I get my customers to pay more for my product?

Answer: The old adage 'you get what you pay for' implies that if you include more in your product or service you can charge more.

Research has shown that the 'core' product or service accounts for 80% of a product's costs but only provides 20% of its impact in the customers' eyes. There are not many things you can do with core product to make it different from all your competitors' products. However, what you can do is develop your service offering to be very different. The 'soft issues' in the outer ring of the diagram below, which focus on your service, may only account for 20% of costs, but the impact of these can be 80% of customers' perception of your organisation or its product/ service. So this is about getting customers to think about price as only one aspect of what they are buying.

Core v Augmented Product

We tend to think about the product as being the only thing a customer buys. But in reality they take into account your company's reputation, delivery time, payment terms and whether you're nice to deal with when they phone you. In practice customers want a solution to their needs and they prefer to buy certainty. This is why some small garages are very successful. They give that personal service and even fill up your tank with petrol for you if you want. Just what some people need and they will pay extra for it.

A bundle of product and service is therefore more capable of being differentiated and sustaining a higher price.

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