Why are we prepared to pay a premium for one product, and not for the other

Why are we prepared to pay a premium for one product, and not for the other

Value PropositionIt caught me yesterday evening how many Apple products I see around me. As I walked through my house, they seem to be were everywhere: iPhones, Ipads, the iMac in my living room, the Macbook on my desk. I am pretty sure many of you recognize this.

All these products just ‘made it’ into our house without a lot of thought. Didn’t look anywhere else, didn’t compare alternatives or price, just bought them. Now, I am not the person that’s just spending without thinking. On the contrary – but with Apple, it just seems to happen. And that made me think.

Why do people buy certain products without thinking or arguing, being prepared to pay a premium – while being the most difficult negotiators on others? 

Let’s face it: For virtually every product or service, there are pretty good alternatives – quite often with even higher quality, feature-rich or technological advanced.

Perhaps the even bigger question: What can we do within our software business to achieve such status ourselves amongst our customers and become ‘the obvious one’?

One thing we can learn from Apple is that they are masters in carving out their ‘ideal audience,’ i.e., who they are for, and who they are not for. They don’t have the highest market share in any category (and never had). Still, they take the lion share of revenue and profit. They attract an audience that’s prepared to pay a premium because it gives them something more significant than a good phone, tablet, or computer: a symbol of who they are and what they stand for. It goes back to Apple’s core values: Think different. 

Thinking different is what’s engrained in everything that Apple does. They’re not for everyone – they are for those that tell themselves the story they are different / aspire to be different. Even if Apple is not first to market, it doesn’t matter to their fans. They line up long before the stores open when a new product comes to market. It’s for them – and they know it. There’s trust and a sense of belonging.

So, here’s a challenge for you: If you analyze your customers beyond the notion of the typical demographics like industry or size of business – what other characteristics can you identify that make up your ideal customer (and I am talking person here, not ‘organization’)? What story are they telling themselves? What do they believe, care about, or desire that you offer them like no one else? What are they prepared to pay a premium for? What if you’d market that?

Ps: You’re not alone having this challenge. If you value being challenged on your assumptions and receive generous feedback about this very topic, I invite you to join the Remarkable Effect Tribe. You’d be surrounded by peers – tech-entrepreneurs that think and act like you on a mission to do something big and meaningful too.

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