Price Does NOT Equal Value: The Lesson I Learned Being Stuck on a Mountain Pass
Have you ever wondered why some people will spend money on items or experiences you would never think about purchasing? Sometimes people will buy a $200 pair of shoes while others will only spend $50.
This is for 2 reasons:
1) Value is perceived differently by each purchaser
2) Price is not the same as value
The Monday prior to Christmas, I was on a call with my business coach, Sarah Walton, and she brought up the perception of value. Sarah said, “money flows to where the perceived value is highest AND only the buyer can set that value.” What amazing insight that I would later learn firsthand!!
On Thursday, my husband, two kids, and puppy headed back to Seattle from a short trip to Eastern Washington. If you’re not familiar with the area, this involves driving over a mountain pass that, in the winter, is often snowy and icy, and where cars and trucks have frequent accidents.
Around 10 am, we pulled off the highway for one more tank of gas and a short coffee break, hoping to make it home within the next 2 hours. While we pulled in, the roads covered in icy, compact snow, we got a text from friends who happened to be traveling just ahead of us. They were stopped due to a large accident.
We decided to hang out for a little longer than planned. Then I got a text alert that the pass was officially closed with no estimate of reopening.
I had to make a quick decision. By now the lego display in the coffee shop was getting terrorized by a toddler despite the handwritten sign asking patrons not to touch it; the 5-year-old was getting antsy, and the dog was getting cold in the car (20 minutes into a stop - you get it!).
I looked on Expedia for a pet-friendly hotel. It was a few streets away. We grabbed our coffee, got in the car, and headed to the hotel. At the hotel, I ran in and asked if they had a pet-friendly room available and if we could do an early check-in. With some extra fees, we had a room and could all be warm and safe. An hour later, I was curious, so I checked Expedia and saw that the hotel was sold out - some other folks must have had the same idea.
My kids were thrilled to be in a dingy hotel watching a movie and eating McDonald’s for lunch. Right around 1 pm, the pass update finally read “estimate opening of 3 pm”. The weather was great, but another storm was coming in around 10 pm. My husband and I decided we needed to head out as soon as the pass opened.
At 3 pm, the pass opened. We packed up, checked out, and jumped on the road.
Was the 4 hours of a hotel room worth $165?
Yes. 100%.
I was so grateful to be in that room with the weird carpet and questionable bedspreads to contain an unmanageable toddler, an anxious dog, and a curious five-year-old. We were safe and warm. We weren’t stuck on the road running out of snacks and gas. Safety and heat have almost an infinite value. So maybe this example is a bit extreme, but it was a great reminder that value and price do not always match - in fact, they probably rarely match.
So, when you’re pricing your product, you should absolutely look at competitive pricing, AND you should think very carefully about the value you’re providing.
What is value? How do you quantify it? Don’t stress if you have no idea. Take some time to think it through. How does your customer feel after they have used the product? Do they get more sleep? Are they less anxious? Does it save time?
Quantify the things that aren’t COGS (Costs of Goods Sold) and then price your product. You provide value, not just a cost.
