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Maximizing Value: How to Leverage Psychology to Raise Your Prices

minute read

Clients often ask me, "How can we charge more?" The answer is simple:

Make the value you offer crystal clear.

In economics this is called value exchange.

Many brands provide the value, but they don't communicate it clearly, consistently, or in language that resonates with their buyer. So how can we use principles from marketing psychology and behavioral science to nail our value messaging so we can charge more?

How to understand what value means for your customer (so you know if you’re delivering it)

When it comes to figuring out if something is worth the price, the process is actually more emotional and “irrational” than you’d expect (even in B2B).

Irrational Value Assessment says that we don’t really know how much something is supposed to cost. Instead we make assumptions based on context clues and how they make us feel, to figure it out.

A large part of deciding whether a product or service is “worth” the price is a buyer’s definition of value - how much we want or need something and the price we’re willing to pay to get it.

Turns out, value is subjective. It means different things for different people.

There are also lots of types of value that can motivate people to spend:

1. Functional Value: Does this product or service solve my problem?

If you need to clean nasty, caked-on food off of dishes a tough scrubbing sponge has a high functional value.

2. Emotional Value: Do I get a particular feeling from a product?

Maybe you like to take your kid to McDonald’s for a Happy Meal after their weekend gymnastics class. Your parents used to do the same with you, so it makes you feel nostalgic.

3. Social Value: Does this product or service make it easier to fit in, or improve my social status?

If you’re a high-end consultant that wants to signal you’re a part of that community, you could buy a Tumi carry-on. If you want to signal how much money you make, you could splurge on a Porsche, Rolex, or a YSL handbag.

But how do you figure out what your buyers define as value?

Start by getting to know what makes your buyers tick.

That means research to figure out their specific behaviors, motivations, language, emotions, and pain points.

A buyer psychology report or a customer journey map are great places to start. 

How to clearly communicate your product’s value to potential buyers 

Here are three ways you can use psychology to communicate value (there are more, of course, but these will lay a strong foundation for any business):

  1. Acknowledge the unspoken reasons people buy your product

  2. Connect with your buyers using emotional language

  3. Use language that is clear, concrete, simple, and easy to understand

1. Acknowledge the unspoken reasons people buy your product

Buyers are motivated by more than just keeping themselves warm and fed - they have innate psychological needs that are incredibly powerful motivators to buy.

If you work in marketing you’ve probably seen some version of a psychology framework called Maslow’s Hierarchy, which describes a ladder of needs. It says that once we satisfy our “lower” needs like food and shelter, we’ll search for solutions for things like Self-esteem and Transcendence.

But Maslow’s Hierarchy is… outdated and unscientific

In reality, we don’t have a ladder of needs where one must be satisfied before the others. But Maslow’s Hierarchy is right about one thing - often the most powerful motivators are desires that are deeper than just satisfying our basic physical requirements.

They’re things like:

  • Status

  • Power

  • Love

  • Social connection

  • Freedom

And when you understand and communicate your buyers’s most powerful motivators, you can make price feel like an afterthought.

Here’s a few examples of needs that popular products fill:

  • Liquid Death canned water was created as a way for non-drinkers to fit in at concerts with people who had beer in cans.

  • Axe (Lynx) body spray communicates their value as a way for the wearer to smell powerfully attractive so they can find love - even if just temporarily.

  • Rent the Runway created a luxury clothing rental service because it recognized people wanted to self-express and show off their status by wearing designer outfits, but they didn’t have the budget to buy.

2. Connect with your buyers using emotional language

Most decision-making is driven by emotion, whether we realize it or not.

For example, which one of these is more powerful?

  • Innovative Shoes for Modern Runners

  • Just Do It

When you describe the problems your product solves, using emotional language will help customers more easily see the value in what you’re offering.

If you’re a tech startup that makes design software, don’t say:

Reliable, cloud-based graphic design software

Instead, try:

Design software that won’t freeze up and die two hours before your most stressful presentation of the year

3. Use language that is clear, concrete, simple, and easy to understand

The language you use to describe value has to be persuasive.

And some of the most persuasive language is simple and concrete.

Concrete language is exact and specific.

If we said, "The Big Mac's tangy special sauce, juicy burger patty, and soft, warm, seeded bun are an irresistible combination" then we're using concrete language.

The opposite of concrete language is Abstract language, which describes things in general terms, like:

"Big Macs taste nice."

And too many businesses fall into using Abstract language to describe their value. This is really common in the startup, scale-up, and B2B worlds.

Instead of saying abstract things like, “We make business move at the speed of life” try more concrete lines like:

  • Asana: “Teamwork Without Email”

  • Trello: “Your Project’s Command Center”

  • Zoom: “Your Digital Meeting Room”

Metaphors can also be incredible tools when trying to explain to buyers why they should pay for your product.

  • When Steve Jobs was trying to get people to adopt personal computing, he called computers “bicycles for the mind.”

  • When Jeff Bezos briefed his team to create a loyalty program, later called Amazon Prime, he asked them to “build a moat around our best customers.”

You can also use visual metaphors to express your value to customers.

Tabasco are masters of taking a simple value proposition (it’s hot, ya’ll) and making it interesting using visual metaphors: 

The Bottom Line

When it comes to charging more (or raising your prices), the goal isn't to wring your buyers for everything they're worth. But when you clearly communicate your value in a way that resonates with people, they're more likely to feel your product is worth what you're asking - and pay it.

This approach isn't about rinsing customers unethically or unfairly - instead, it's about making sure your business is being paid fair value for the benefits you provide customers. But to do that, you need to understand if you're actually delivering benefits (and if you're not, what to change about your product or service until you do), clearly communicating that value, then creating a fair value exchange based on the perceived benefits of your product or service. 

In other words, customers have to think you're worth the money that you're asking. 

About the author

Jen Clinehens, MS/MBA

Hi 👋 I'm Jen Clinehens (MS, MBA) the founder and Managing Director of Choice Hacking.

I started Choice Hacking in 2021 to help marketers and entrepreneurs figure out what makes buyers tick, and elevate their work using behavioral science, marketing psychology, and AI.

If you want to learn more, check out links to my newsletter, podcast, YouTube channel and other free resources below 👇


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