Perceived Value is defined as the worth that a product or service has in the mind of the customer. The perceived value of a product or service impacts the PRICE that the consumer is willing to pay for it.
So, given this definition, we can conclude that consumers are willing to pay more for goods and services if they believe the value to be high. Customers define high value, not as buying at the cheapest price/ unit, but getting more than expected, getting something for “free”, or getting what would normally be a high quality, expensive, well known, product or service for a “deal”.
Extending this logic, a company that can add such value to its goods or services at a nominal expense, can charge more for their goods and services due to perceived value, thereby increasing profits. For example, if it costs an automotive services company 15.00/hour to pay an employee for a forty hour week it is a weekly expense of 600.00 labor cost. Charging a labor rate of 40.00 an hour, those hours would produce gross revenue of 1600.00/wk with a gross profit of 1000.00/employee/wk. If this company outfits its employees with uniforms, so that they look like the professionals that they are, it has a positive impact on the overall image of the business, adding a perceived value to the service they perform. In the mind of the customer the uniform defines the mechanic as a professional who has had the appropriate training and someone who can be trusted to work on their $30,000 vehicle, so the increased rate is justified in the mind of the customer.
The increase in labor rate to 45.00 or 50.00/hour is not only justified in the customer’s mind, it is what they expect to pay the true professional. If the price is too low they become concerned about quality of service and ability to do the job. This extra 5.00 – 10.00/hour increase in labor rate will net our owner an additional 200.00-400.00 per employee per week. In this scenario, a shop as small as four employees could add an extra 800.00 to 1600.00 per week in gross profits, but this only works if in the customers mind there is ”perceived value”. If your employees are in t-thirts, customers will expect a “t-shirt” price and a t-shirt outcome. Employees who look the part of a professional with appropriate training and qualifications are exactly that in the customer’s mind.
Now ask yourself if a uniform program with standard technicians garments for 5 people, at an average of $50 to $80 dollars per week (depending on the details of the program selected) would pay for itself in the above scenario. Call Joe Bateman at Lord Baltimore Uniform today and add value to your business and add to your bottom line. 410-732-2700