Having a sound pricing strategy depends on measuring your product value effectively. If you can do this correctly, it will help you unlock the full potential of a product’s success.
Some brands believe that product value is a like-for-like comparison against a competitor’s offerings. Others think that product pricing should be a simple equation that measures the benefits a product brings to its users against the cost of producing it.
The truth is that measuring a product’s value is a lot more complex.
Product managers who understand how to measure the true value of a product can optimize pricing strategies, drive up sales, and unlock additional revenues for the business. While you may be concerned about overvaluing your items, it’s worse if you underestimate their real value.
To help you measure the value of your products effectively, let’s look at everything it entails.
Product value measures the ability of an item to meet a customer’s needs. As customer needs vary greatly between people, there isn’t a standard way to measure product value.
Consider a toaster. If the customer has a large family, then the more bread or bagels it can toast at the same time will influence the value perception of the customer. However, if it’s a single person who lives alone, then it will be fine if it can only do two slices.
Now think about a SMEG toaster. These are luxury items with a sleek design that many people find desirable.
SMEG toasters are more valuable because:
SMEG products match the brand’s personality and measuring the value varies between customers. Not everyone wants a SMEG toaster but those who do are willing to pay more because of the brand’s reputation.
Measuring a product’s real value will depend on external factors such as the brand identity, customer perception, and market forces including competitor pricing.
Customers are the main drivers of product value. While the brand strategy can influence the value perception of customers, there are some common metrics to consider.
The main metrics that determine a customer’s perception of value include:
The above factors should allow you to uncover your product’s true value. You can use this to create a product value statement that attracts more visitors to your online store and increases the number of orders you receive.
Although customers set the value of products with their buying power, brands can influence these decisions. You have the power to present your products in a way that increases the perception of value. How you position your brand and your products can change the way your customers view your items.
Some of the brand value metrics to consider are:
A brand value example that is succeeding in driving up sales comes from the Fender Mod Shop.
With decades of brand recognition, the use of product customization is driving up every value metric for the company. Customers can design their Fender or bass online and create the instrument of their dreams.
The photorealistic rendering of the products gives them immediate feedback on any changes they make, and it’s easy to share their creations with others over social media. With custom creations, Fender is using every metric above to increase the perception of value they give their customers.
By knowing the real value of your product, you can adjust your pricing strategy to make an item more saleable or desirable to customers. This influences your profitability or can help you to change the design that increases a customer’s perception of value.
It also helps you improve your customer targeting, optimize brand messaging, and increase market share. Collecting product and customer value metrics is a great way to make better business decisions and inform your product design in the future.
To understand your product and customer value metrics, you should:
There are many strategies available for measuring the value of your products. The value metrics and methods you use will be unique to your products and market. Consumer tastes are evolving, and brand strategies will have to include these changes in their equation. Below we discuss the major value elements in three tiers you should consider when creating a measurement equation for your items.
Foundational elements like cost, appearance, and availability form the basis of your value equation. Products that save customers time, reduce risks, simplify tasks, or help generate income will have a higher value than those that don’t. Your value statement should focus on highlighting these features of your product.
The second tier of value metrics comes from those features that speak to a customer’s emotions. Consumers will assign more value to items that reduce anxiety, improve wellness, provide rewards, or have therapeutic benefits. A product’s attractiveness, entertainment value, and design aesthetics all factor into the emotional part of the measurement.
Above the emotional tier, life-changing elements include features like providing hope, inspiring self-actualization, or delivering a feeling of belonging. Sustainable products and luxury items fall into this category, and any assessment of value should highlight these characteristics.
When you develop an equation for measuring value, consider the product from each of these elements. You can then assign a weighting to each metric within a tier for your product and extract a quantifiable value that informs your pricing strategy.
The final step to measuring product value is writing an accurate value statement.
A value statement or proposition goes beyond a simple product description and addresses each of the value elements you use to set your product’s pricing strategy. Value propositions tell customers exactly what they want to know about a product and are one of the key drivers in converting visitors into buyers.
A value statement is your way to:
Recently, value statements are no longer just a few lines of text you add to your product pages. With 3D product visualization, personalization, and augmented reality, a consumer’s experience is part of the value proposition.
The way you present your products changes the value perception of customers. An interactive, 3D rendering of a product provides customers with an engaging and immersive experience that increases sales. If you include personalization options with the experience, you can boost the perception of value even more.
An interactive product page creates trust that every brand can benefit from.
Accurately measuring your product value starts with providing immersive experiences to your customers. A product personalization platform makes it possible for customers to co-create designs and see the results in real time. With product personalization, you can increase the value perception of customers and demonstrate an item’s unique features instead of just listing them on a product page. ConfigureID helps brands from around the world to stand out online and deliver engaging experiences to customers that boost average order values and customer loyalty.
To start increasing your product value perception with immersive experiences from ConfigureID, request a demo.