ON VALUE vs COST: WHAT REALLY MATTERS

There are a lot of conversations about pricing in our industry.  Most of the conversation is around whether or not the influx of photographers are driving the overall price down - and what it means for each of our businesses.

There are about 5 posts I could write about that, and I think I might - over the next few weeks.  Today, I want to talk about something that's almost universally true.

People will buy a good or service, when the value to them, exceeds the cost.  OR: Value > Cost = Purchase.

If this is almost always true (and it is), then what does it mean to my business?  Let's look at the costs, and perceived values that impact the decision to hire photographers.  Understand the costs, and then focus on strengthening the value.

REAL COSTS THAT CLIENTS CONSIDER:

Price: The most obvious "cost" is the one to your wallet.  Every item or service we purchase as a dollar cost associated with it, and this is the one we spend most of our time selling against.  It's also the one we believe our clients spend most of their time making decisions with.  In reality, it often isn't.

Price is, in many ways, the least important "cost" of the three.  The next two often play a MUCH higher role in people's decision framework.

Opportunity Cost: This is the "cost" to us when we can't purchase one thing because we've spent that money on something else.  For a wedding, it means that in order to hire a more expensive photographer, we had to cut 25 people from the guest list, or go with a DJ instead of a full band, or.. you get the point.  

Opportunity cost is a real issue for people, often a much higher one that we think.

Inconvenience Cost: This is the level of difficulty and irritation we have to go through in order to acquire a given good or service.  An example most of us can relate to is the inconvenience associated with commercial air travel.  It comes with a HIGH inconvenience and irritation cost - take off your shoes, sit in a small seat with a bag of peanuts, pay extra for your bag, charge you for changing your plans, etc.

In our industry, this "cost" is just as real.  If you're hard to work with, hard to contact, or make it generally difficult for people to do business with you, you come with a HIGH inconvenience "cost."  Don't get me wrong - for EVERY purchase, there's an inconvenience cost.  

Even going out for groceries requires you to have gas in the car, drive to the store, walk through the aisles, pick out what you want, wait in line to pay, and then haul and unload all your stuff.  The goal is to reduce this inconvenience cost, OR provide so much added value - that it's worth it - relatively.

SO, WHAT IS OUR VALUE?

Tangible goods These are the things (products) you sell to people.  It's hours of coverage, albums, prints, discs of images, and anything else you "sell."  These are the things people ask you about, and because of that, we think it's what they really care about.  It's not :)

Tangible goods, are in fact, the least "valuable" part of what we offer - although we often focus most of our energy here.  Tangible goods are what people use to counteract the "cost" of price.  "The more stuff we give them," we believe "the more they'll see the value for the price." 

Expertise Your expertise is, how long have you been in business, how many weddings have you shot, what is your style, do you shoot digital or film or both.  It's your body of work, and your level of professionalism.  It's the quality of your images, and the effect they have on people.  

Expertise is reassuring to clients.  Although expertise isn't always immediately apparent to clients, there's no question it separates professionals from those that are starting out - and whether they know why or not - clients can tell.  Expertise is the "value" that counteracts the "cost" of opportunity.  I feel better about having this AMAZINGLY TALENTED photographer, even if it means I can't have the 9 piece orchestra.

Experience  No, I don't mean your experience as a photographer - I mean the experience clients have as they work with you.  More than your tangible goods, and your expertise, the overall experience that clients have when they engage with you has more to do with your perceived value than anything else.  

From the first time someone hears about you - everything that happens from then on - forms in their mind, an impression of you.  The way you follow up with your clients matters.  The way you interact with your clients at their wedding matters.  The way you interact with their guests matters.  The way you live up to your promises matters.  

A good client experience can completely negate "inconvenience costs." In fact, value of experience is inversely related to inconvenience costs - the higher the level of experience, the lower the level of perceived inconvenience.

When you focus on building value, you minimize the "costs" to a client, and increase the likelihood they will purchase your services.

People will buy a good or service, when the value to them, exceeds the cost

People will pay a higher price, and as a result, a high opportunity cost, when there is exceeding value.  If you continue to compete based on price and tangible goods, you'll fight an uphill battle to the bottom of the barrel.  If you focus on adding increasing levels of value, you'll find clients that will reward you with their trust - and their business. 

What do you think? How do you create value for clients, so that "cost" is no longer a factor?

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