All functioning watches tell time. But it isn’t easy to think of a market with a broader range of prices. A simple Timex wristwatch on Amazon will run you around $32 and still look rather lovely. Or you can get a mini-computer on your wrist from Apple for $379. But if you want a Rolex, you need to shell out $5,000 to get an entry-level model.
All of these watches tell time. Rolex’s quality is bound to hold up longer than a Timex, but it isn’t apples to apples in build. So let’s compare Rolex to Rolex; according to the Robb Report, a Rolex watch with a rare variant sold for $17.75 million at auction. That is a 354,900% increase in price from the entry-level Rolex.
You get the point. Wristwatches are all clocks on your wrist, but they aren’t all the same in their value to the consumer. Or to every consumer. If you are struggling to pay your bills, a Rolex isn’t something you want to buy.
If you are selling clocks, what kind of marketplace would you like to be in? I would aim for accessible luxury, where profitability and accessibility meet up to create long-term growth potential.
Value Isn’t Always Tangible.
Value is not always about what the product does. It isn’t merely to have something on your wrist to tell time. It is about status, rarity, and perception of quality.
You can have real quality and not market it, or you can have terrible craftsmanship and create the perception of quality. I would recommend having both quality and the perception of quality. That is where you can set the price higher and still have customers recommend your product or service to others, aka word of mouth.
Products vs. Services
You can price any product or service based on the value it provides. You have to take a different approach on how you position that value depending on the sector. The critical difference is this – with a service, you design the value proposition; typically, it is the same as the actual service.
With a product, you develop the product with its potential benefits in mind. But it isn’t always automatically the same as the product itself. Both require branding to position yourself in the marketplace with the right price point, to the right audience!