COST vs VALUE: What do they mean for your promotional products?
What is the difference? What do they actually mean? And how do they impact your promotional products?
Cost and value should be carefully considered when deciding on a budget for branded merchandise. They are a valuable tool in a larger marketing strategy, after all. Read on to find how cost and value work together and what they mean for your products.
Cost is the dollar amount spent on your branded merchandise. It’s the number that you may feel is the most important, but when it comes to investing in your business, is the out-of-pocket amount the only one you consider? Of course not!
The value is what the customer perceives your products to be worth. It is not a dollar figure, but is based on the product’s usefulness, quality and longevity. Value is individually perceived and not easy for companies to track. However, it is possibly the most important factor for promotional products, as we’ll discuss below.
How do they work together?
Promotional products must maintain a careful balance between cost and value to be effective. Your company wears a product’s cost in the hope that your potential customers will see its value, keep it and eventually give you their business. Because value is unique to an individual it is not a direct reflection of a product’s cost. For example, what you spend $20 per unit on may be of little value to the recipient and give little to no return on investment (ROI). Likewise, a product costing you 50 cents may be of great use to the recipient and return upwards of 1000x its outlay in future business.
The ideal ratio is low cost and high value but today’s consumers aren’t so easily bought. We’ve all become so used to being sold to that we’ve learned to tune most advertising out. Anything we receive that even looks like it’s trying to sell to us, is treated with suspicion and its value decreases.
A promotional product’s ‘give-away’ nature
Branded merchandise can also suffer from its ‘give-away’ nature. Because it costs the recipient nothing, a promotional product often has a low perceived value. We know when what we’ve been given has been mass-produced – that feeling takes away the gift’s uniqueness and any sentiment it may be trying to convey. This is why it is key to know your target market and have a focused, strategic aim in your branded merchandise marketing.
Choose promotional products that are not like anything your customers have seen before, are useful and feel like they cost something substantial. This increases their perceived value and will compel the receiver to keep it. The longer your products are used, the more advertising your brand receives.
Cost per impression
Each impression – that is, each time your brand/contact details/logo is seen – increases the chance of someone doing business with you. When your promotional product is in use often, even every day, the impression count sky-rockets. How many times will that bag be picked up by your client, and how many times will it be seen by others? The relatively small cost of a promotional product can therefore be well worth it for the number of times your brand is seen and engaged with.
A promotional product with a low cost to you but a high perceived value to your customer will also be of great value to your business. Well-made, well-placed merchandise has the potential to provide huge ROI in the form of revenue and brand loyalty, making its initial cost well worth it. You just have to get the cost:value ratio right.
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