Value VS Price
  • May 31, 2021
  • EOE Digital

How much does bread or milk cost?
Let’s assume that sliced bread costs R13. Therefore, if tomorrow the price of bread is R250 we can agree that would be a rip-off and you would simply not purchase it unless Rassie Erasmus’s signature was on it and he was present!
Remember that in our industry, insurance is not a desirable product. Why are people queuing up to buy Krispy Kreme but not insurance?

That is why value has to be present in your business!


  • The phychology of price
You will notice that instead of referring to it as the actual value, a lot of times people refer to it as perceived value. That is because clients perceive benefits and costs differently and these perceptions aren’t even conscious.
It's easy to perceive the benefits and costs of a piece of bread as a requirement for living over the benefits of having risk policies.

On the one hand, pricing drives the financial health of the business but on the other hand, if the customer doesn’t see the value in the product offering (including the pricing) the business’s ROI will not be met. Therefore, your customer's interpretation of value must be the driver behind the pricing decision.
 
  • Understanding your customer
Why does your customer ultimately decide to see a financial advisor? Because they want to satisfy a need or a want. The past month, we discussed how consumers generally make buying decisions. If you would like to find out more, click here, but for now think about how your services would fit into satisfying this need or want?

  • Value proposition
Customer value offering: Customers buy a product or service because they anticipate enjoying value that they would not have in the absence of your product or service.
People don’t buy products they buy the results that the service will give them. According to a study conducted by the ILO, South Africans scored less than 54% on financial management skills. This highlights how essential YOUR services are (just in case you needed assurance).


  • Therefore, how do you transfer that value to your client? 
  1. Holistic financial planning
  2. Consolidation
  3. Tax reduction and planning 
  4. Behavior financing 
  5. Cost reduction
  6. Investment allocation

I am not going in-depth with the above-mentioned concepts because you understand them more than anyone, but how do you project all-in-one services?


  • Become a thought leader

If you can project your expertise on these topics on platforms with a large audience, your prospects' thought process immediately goes to "this guy really knows his stuff".


  • Through a digital presence

There is no better access to these "platforms than on digital media". Don't know much about digital media? Then we can assist you with that!


In summary, increasing the value of your business can either increase the perceived benefits or the perceived cost. No financial advisory can reduce the costs as these are fixed and why would you want to? You understand the value that your business can create in others. Thus transfer that value!