Value-Added Services: You Don’t Have to Always Lower Your Prices

When it comes to capturing the market and increasing revenues, there are traditionally two schools of thought. The first option is to be a low price leader in your industry and pursue sales volume, as opposed to massive per-unit profit margins. The second option is to offer a product or service that’s perceived as more valuable than the competition and to sell it at a premium price point. Sometimes the latter option makes more sense.

Price vs Value

Value – albeit a simple word – is one of the most misunderstood terms in all of business. Over the years, the meaning of value in the context of sales has been misconstrued. It’s become synonymous with “value pricing.” Thanks to massive big box retailers like Walmart and Target, this simply means “low price,” “discounted,” or “cheap.”

But this isn’t what value is at all. As business expert Ralf Leszinski says, “The real essence of value revolves around the tradeoff between the benefits a customer receives from a product and the price he or she pays for it.” In other words, price is only half of the value equation. “So, the higher the perceived benefit and/or the lower the price of a product, the higher the customer value and the greater the likelihood that customers will choose that product,” he continues.

What does all of this mean and how does it relate to your business? Well, it means there are alternatives to being a low price leader in your industry. By increasing the perceived value of your products and services, you can charge a premium.

There are reasons why people purchase luxury cars, order designer clothing, and eat in five-star restaurants. Namely, the perceived value is higher than the cheaper-priced alternatives. While you may turn off bargain hunters once you stop competing for the cheapest price point, you’ll inevitably resonate with an entirely new demographic that understands that value involves more than dollars and cents.

5 Value-Added Services to Consider

When you make the decision to consider value-added services, you’ll quickly realize there’s an array of options. Resist the temptation to haphazardly make your decision. Carefully consider all of the options and weigh them against your existing value offering.

Here are a few of the most popular ones:

1. Free Shipping

Free Shipping

While Amazon has a lot of different value-added services, one of their biggest differentiators is free shipping with a Prime membership. There’s something about the word “free” that excites customers and helps them overcome the traditional barrier of expensive shipping fees.

If a majority of the companies in your industry require customers to pay for shipping fees, you may be able to come in and increase the perceived value of your products by offering discounted or free shipping. You’ll obviously have to eat the costs, but it’s possible that the increase in revenues and brand perception will offset these expenses.

2. Superior Customer Service

Sometimes a value-added service doesn’t actually have to cost you anything in terms of extra spending or diminished revenues. A simple increase in the quality and responsiveness of your customer service can be a long-term strategy. This is something Chick-fil-A has been able to do in the fast food industry.

“It’s the little things that Chick-fil-A does really well that create a memorable experience,” says marketing expert Ross Beard. “These little things exceed expectations and create repeat customers who turn into ambassadors. In fact, 10-15% of Chick-fil-A’s customers are ‘raving fans.’ These are the people who do over-the-top things to show their love for the brand like dress up as cows on ‘Cow Appreciation Day’ to win a free sandwich.”

This isn’t the quickest value-added service. While a new free shipping policy can gain immediate traction, changes to customer service processes could take months or years to be fully recognized on the consumer end of the relationship. Once they are recognized, though, you can expect to see the perceived value of your products increase.

3. Ancillary Products

While it’s sometimes risky to touch your core products when they’re already doing well, one way to add value to these items is by launching free ancillary products. You see this all the time in retail settings where companies offer buy-one-get-one deals, product bundles, or free inserts.

The classic example involves Cracker Jack. Whenever anyone thinks about Cracker Jack, the first thing that comes to mind is the prize that’s tucked away inside. Decades ago, the company’s executives added these prizes with the sole intention of increasing the perceived value of their tasty snack. It certainly worked!

4. Free Resources

You don’t have to give away a tangible ancillary product to add value to something. In the age of software sales, subscription services, and eCommerce, many companies turn to free resources as a solution for increasing the perceived value of a core product.

Examples of free resources include eBooks, white papers, case studies, podcasts, tool kits, and any other pieces of exclusive content that can only be accessed when a purchase is made.

5. Guarantees and Warranties


One of the most popular value-added services is the guarantee or warranty. By backing up a product with one of these trust-signals, you’re able to show the customer that you believe in the quality of your product and stand behind the claims it makes.

Warranties are common in virtually any industry, but are typically implemented and marketed when it comes to major purchases like homes, cars, equipment, machinery, and furniture.

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