Lobsters were not always perceived as a fine-dining delicacy, and fed to prison inmates and slaves before the 1900’s. That all changed when train cars emerged, and rebranded lobsters as a high-class train car cuisine.
Did you know lobster used to be considered cat food?
While people once turned their nose up at lobster, now they paid outrageous amounts for them. The value of lobsters increased.
So what happened here? Why did the sales increase when the price increased?
I have a great story about how I accidentally put this into practice. I run side business where I sell costumes for people going to fancy parties or festivals.
When I started a full time gig, I didn’t have the bandwidth to be sawing away spray painting in my living room for every order, but I didn’t feel like closing up shop to my side hobby.
Instead, I quadrupled the price to an outrageous high. To my surprise and disbelief, sales actually increased. People from all over Europe were not only purchasing my costumes, but paying extra for expedited overseas shipping. My apartment quickly became a craft and ship station.
People generally tend to assume things that cost more are more valuable and worth more.
On occasion, value perceptions such as these can send masses of people into hysteria- such as the tulip craze, or bitcoin. The stock market runs on value perception.
Another interesting factor that impacts our value perception is anchoring.
Real estate agents use this method to sell houses all the time. An agent will take their prospect to a horrendous hole in the wall fixer upper first, which makes the next property look all the more appealing.
Or in comparison, if you tell someone your hourly rate is $1000, but you will give them the swell rate of $600, suddenly that discount is sounding like a great deal.
Before you start feeling guilty about manipulating the perception of value, consider this:
The more someone invests in something, the more they value it.
If someone has to spend time waiting in line for something, that person values it more; think people sleeping in Apple store lines.
If someone has to go through multiple interviews to obtain a position, they value their job more: think Google’s rigorous interview process.
If someone has to go through multiple tests and hazing, they are more proud to finally become a member of a group; think Fraternity initiation and rights of passage.
When served the same wine priced at either $5 a bottle, or $90 a bottle, blind testers enjoy the $90 bottle more.
Value perception can also backfire on employees attempting to renegotiate a salary. If you current employer has pegged your value at $75,000, it can be difficult to ‘rebrand’ yourself to a six figure commodity. That is why many people need to switch companies in order to receive the salary bump they are after.
Psychology aside, value perception also applies to how you feel about yourself. What is an hour of your life worth? Considering this may be your only time on earth as you, each moment you have is your most priceless asset.
For every hour you spend working for someone else, you could be working for yourself, learning something that makes you more valuable, or simply enjoying a moment of peace.
Placing a premium on your time, products, or contributions will show others that you respect yourself, and in turn, they will respect you as well.