Price vs Cost?

[RR151]

Has anyone heard this term before?

Anyway back to Price vs Cost and a way to re-frame the client's perspective. Price = the physical price of the product and/or service. Cost = the value of the said product to the client.

Price:

So as I understand this you pay $2,000.00 for the new website with an email collection tool. It doesn't matter what features are in the website but you need to be able to measure the success/failure.

Cost:

Next you track the new website and find that the new website is bringing in on average $500 per month in new sales. The Cost is then measured over the next 3 years, which make the value to the client = $18,000.00.

The price is $2,000.00 the value to the client is $18,000.00. To re-frame the price vs cost it is 1) price is $55.55 per month and 2) the cost or client value is $500.00 per month based upon the website measuring tools.

Instead of pitching your price maybe you should pitch the way you measure the true value. You answer the: "what's in it for the client?" Then add "what if scenarios?" What if you made $100.00, $500.00 or $1,000.00 per month with the new website?

Any thoughts, RR

[Harold Mansfield]

You can't always measure it that way. A well done website is invaluable to the entire presentation and perception of the company. I've never ordered anything from the Coca Cola website, but if it were sub standard I'd have a bad opinion of the company and probably unconsciously or consciously choose a different brand that has a better overall presentation or perceived value and professionalism.

In short, if Coke had a crappy website I'd think it meant that they were slacking on quality of the product too.

[RR151]

You can't measure it that way? I don't understand?

The objective is not to sell stuff,

The website is like every other marketing tool it needs to be tracked and measured some how. Or maybe your talking about a feel good website that doesn't sell stuff but has an objective to deliver a positive brand perception without follow up. You can still measure the bounce rate, right? If people only stick for 5 seconds then the design has failed. If they hang for more than 5 minutes then the design is a success...the measurement is not in $$$ it in a positive bounce rate.

Commercial website with the objective to sell stuff:

Let's assume the website meets your standards. So it is a great website that reflects the talents of the web developer, which means people buy their stuff because of the great design.

Or do you mean that the presentation and perception of the company doesn't sell the "buy stuff" from me. If so then the website design has failed the client, right? If it is a crappy website like maybe if coke has a crappy website you won't buy their product but the site still gets 10% to buy stuff.

So with the perfect website you sell $1,000.00 per month. With the crappy website you sell $100.00 per month. You can still measure the client value of the website, right?

Just trying to understand, RR

[Freelancier]

That's not price vs. cost. That's price vs. value. Cost is on the negative side where you factor in not only the dollars spent (the price), but also the opportunity costs lost, the wasted management time mitigating any issues, the damage it might do to your brand, etc.

[Freelancier]

If you sell on price, you win today... but unless you have a magic formula for continuously cutting your costs, you'll end up losing tomorrow.

If you sell on value, you win today and if you can actually deliver that value, you win again and again and again.

[billbenson]

Think of a website as a store front. You need to mop it, paint it from time to time, update how things are displayed inside to best sell the products etc. It is one of your ongoing costs.

If you are selling hard goods, what you pay for them is part of your cost. If you inventory and ship those are also costs. You have to add all of that up to know what your real product cost is.

Price is simply what you sell stuff for. I choose to sell my products for a high price. Lower volume, but it works out for me. You may to sell in high volume at a lower margin. Different business model.

[RR151]

That's perfect Freelance! Isn't it so true...

If all marketing is measured and tracked you can prove the value. If not you can sell on Price. Perfect concept...

One of the best tools is the business phone. To track that phone just ask at the end of each phone call. "Can I ask where you found this phone number?" Then mark down the information.

You might be surprised with the answers. Next if the phone call generated a sale mark down the amount.

Your YP ad might not be doing it's job but that can only be proven by tracking the phone with this low tech method.


Just a thought, RR