The Psychology of Combining Products and Services

What is “Value”
It’s important to know what value is when developing “packaged” products or services so allow me to take a moment and explain the true definition of “value.” Value is…

* Always variable depending on the consumer
* Is based on perception rather than reality
* Is a tradeoff between price (your investment) and benefits (what you get)

I like to think of value as an equation:

Value = Perceived Benefits ÷ Price

Now let’s play with the value equation to see how it works in the mind of a consumer.

Scenario 1 - If Price goes up, and Perceived Benefits stay the same, Value goes down.

Scenario 2 - If Perceived Benefits goes up, and Price stays the same, Value goes up.

Scenario 3 - If Perceived Benefits goes up, and Price goes down, Value goes way up!

As a marketer, you always want to position your offer with the value going up. To do this you must either lower your price, increase your benefits, or increase your benefits more than you increase your price. Whatever you do, your value must go up because that’s how consumers choose you over your competitor.

Okay, enough of the theoretical stuff, but its important to understand this when creating a bundled offer. Why? Because if you bundle your products and services right, you will be able to add even more benefits to your customer at a lower unit price, thus dramatically increasing the value of your offer in the mind of the consumer.