Niche marketers should price their products and services based on the value received by the customer: it is the customer’s perception of value that counts. If you calculate price based on cost and/or the competition, you are not in a niche market or you are pricing incorrectly.
Niche market customers buy your product or service because it is different from the other options available. That difference is your value and it can be worth a premium price. Value is subjective and not every customer will need your product’s unique benefits, but this is how niche marketing works. As a niche marketer, you focus on serving a market segment that has been overlooked or underserved; the value or difference you add is your special knowledge of their unique needs.
The value can come in the form of unique product or service features that you add. That value could come in many forms, even prestige. For example, Tiffany’s is a “prestige” brand for jewelry; people buy jewelry at Tiffany’s because of the brand. Yet, diamonds are diamonds. You can buy the same quality diamonds at Costco, but you don’t get the prestige buying experience. For the Tiffany’s customer, it is worth the price premium to walk out the store with the Tiffany’s bag or box.
You can add value to your product by doing any of the following:
– special payment terms
– after purchase service agreements
– special packaging
– fast delivery
– concierge service
– special product features
Value based pricing is determined as the highest amount that a customer will pay for your product or service given the unique value that you offer when compared to the other alternatives. By giving the niche customer exactly what they want, there are no other real alternatives. If that is the case, price it accordingly.
John Bradley Jackson
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Please visit my website at www.firstbestordifferent.com