Hi again! So, I had a couple of incidents recently that got me thinking about something called "perceived value." Let me share them with you.

Incident One

The first incident happened a few days ago when one of the switches on my electrical board suddenly stopped working.

Now, I actually knew how to change the switch myself, but I was caught up with other work and decided to call an electrician instead.

To my surprise, he charged me INR 200.00 for a task that took him just 10 minutes to complete.

I couldn't help but feel like he overcharged me.

I mean, come on, it was just a switch! Deep down, I felt a bit cheated, although I didn't say anything about it.

Incident Two

Now, fast forward to yesterday. There was a power fluctuation at my place, and it caused a complete socket failure.

This time, I had some free time, so I thought, why not take a look at the electrical board myself? As I inspected it, everything seemed clean and in order. There were no signs or smells of any burns.

I knew by now that it was out of my expertise. I needed professional help to fix it. So I called on the same electrician.

This time, he dived right into the complex wiring system up in the attic and swiftly identified the point of burn. In no more than 10 minutes, he cut and repaired the wire, and voila, the power was restored.

Surprisingly, he charged the exact same INR 200.00 as before. But you know what? I didn't feel the slightest bit upset about it this time. In fact, I was happy he didn't ask for more, considering the complexity of the task.

The reason why I wanted to share these two incidents with you is because they got me into some serious thinking.

It's fascinating how our perception of value can influence our buying decisions. It's not just about the price; it's about how much value we feel we're getting in return for what we pay.

In the first incident, changing the switch seemed like a piece of cake, and I probably could have done it myself.

But in the second incident, tracking down that faulty wire required a level of expertise and knowledge I didn't possess. Plus, there was a real risk of getting electrocuted if I had tried to fix it on my own.

So, in a way, I subconsciously valued the electrician's expertise and his ability to resolve a potentially dangerous situation.

I now believe that "perceived value" is a powerful concept that applies to our business very deeply. It's not just about the price of the product or service itself; it's about how one perceives the overall experience and the value it brings to his or her life.

Having given it some more thought, I realized there are a couple of factors that affect our perception and our buying decisions.

  1. Risk - If we find that doing a task on our own involves some form of risk (physical, mental, financial...), there is a higher probability of us delegating that task to some expert. The perceived value of the task increases in such cases.
  2. Brand Value - When paying money, we would almost always find a higher perceived value in a more recognized brand, even if a less-known brand offers more features or better services for the same price.
  3. Time - If a product or service saves a significant amount of our time, it has a higher perceived value to us.
  4. Availability - Any product or service that is easily available or has abundant supply has a lower perceived value. I can confirm the rush when I want to buy something on Amazon and they show a limited stocks available label.
  5. Social Status - Our perceived value towards things changes depending on our friends, acquittances, and people we meet and the perceived value they carry. If we feel that doing some task ourselves will be frowned upon by our social circle, we will be more inclined to delegate the task, perceiving it as more valuable.

Conclusion

Now, I'm no marketing expert, but as an entrepreneur, I can't help but see the importance of making sure our customers perceive a higher value than what they actually receive.

We want them to feel like they're getting a great deal, maybe even underpaying for what they're getting.

The goal of me as an entrepreneur should be to research and identify the correct perceived value of my target audience and set my offerings accordingly.

I will definitely be putting more emphasis on this from now on.

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