The Power of Perceived Value

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It’s a hot, sunny day on the beach. You only have ice water to drink, but you’d love an ice-cold beer. Your friend has to make a phone call and offers to buy your favorite beer on the way back. However, the only place to buy beer is a small, run-down grocery store. He asks you for some money because he said it may be expensive. How much money would you give your friend?

Think a moment before moving on. How much money would you pay?

Richard Thaler, the pioneering behavioral economist, conducted this experiment with MBA students. In the above situation, MBA students would give, on average, $4.10.

But what if your friend had to buy the beer from a fancy hotel instead of a small, run-down grocery store? Would that affect how much money you give to buy the beer? Before answering that question, consider these facts:

The beer is the same brand regardless of where you buy it.

The beer will taste the same regardless of where you buy it.

The beer arrives at the same time regardless of where you buy it.

How much would you pay?

As you likely guessed, Thaler asked a different group of students the same question, only he switched the location to a fancy hotel. On average, students would pay $7.25 for the same beer from a fancy hotel.

In this experiment, Thaler concluded that the “perceived quality of the deal” influenced the price points. In value-added selling, we also conclude that the “perceived value of the deal” influences the price point. The beer sold at the “fancy hotel” had higher perceived value, so, customers were willing to pay more.

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Perceived value positions your solution as the front-runner. Enhancing your customer experience with perceived value establishes your solution as the benchmark from which other alternatives are measured. A higher perceived value establishes a high expectation, oftentimes setting the bar just high enough so that it’s out of your competitor’s reach. You’re setting an expectation only you can meet.

Perceived value is determined (in part) by your price. In the absence of all additional information, price is the greatest indicator of quality and performance. In that vein, it’s better to be higher-priced than lower-priced. Higher-priced products have a higher expectation of performance. Consider the diminishing effects of discounting. The lower your price, the lower the perceived value.

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Build perceived value with a better presentation and marketing material. Put your best foot forward. How do your materials look? Do they have instant visual impact? How well do you use color and graphics to communicate your message? The quality of what you present to buyers must parallel the quality of your solution. If you present a message that your company is the value-added partner, your materials must reflect that image. If they fail to mirror that image, you create cognitive dissonance; as a result, the buyer rejects your offer because it doesn’t feel right.

Package your solution to enhance the perceived value. One of my home-remodeling clients demonstrated the power of perceived value on a project. His company remodeled the home’s exterior and added a new master bedroom. The homeowner was out of town during the project and planned to return upon completion. Two weeks after the project was finished, the homeowner alerted the contractor they would be arriving back in town the next day. The remodeler drove by the home to ensure everything looked right. However, the yard and roof were covered with leaves. The remodeler decided to remove all the leaves and freshly cut the grass. The remodeler said, “It was a minor expense that enhanced their satisfaction.” His effort was like gift-wrapping a present. This simple act made the house look better. He also mentioned that this particular customer rewarded him with several referrals. That’s the power of perceived value.

Every seller has the opportunity to enhance the perceived value of their solution. Perceived value positions your solution as the front-runner. Maximizing your perceived value is a quick way to make a positive impact on your presentation. Perceived value is how something looks, feels, and sounds to the buyer. Does it pop? Does it have splash? Does it make the buyer’s blood race? The higher your perceived value, the fewer price objections you’ll experience. That’s the power of perceived value.

Paul Reilly is a speaker, sales trainer, author of Selling Through Tough Times (McGraw-Hill, 2021), coauthor of Value-Added Selling, fourth edition (McGraw-Hill, 2018), and host of The Q and A Sales Podcast. For additional information on Reilly’s keynote presentations and seminars, call 636.778.0175 or email Visit and signup for the free newsletter.

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