One of the advantages of being differentiated by the quality of the service is being able to have a higher price than the competition. But the question may arise: how much more can you charge? Is there any way to calculate it? The concept of “ non-monetary prices ” can answer these questions.
This concept is mentioned by the authors Zeithaml, Parasuraman and Berry in their book “Total quality in service management”. They say:
“ Consumers have to spend more than money to use a service; they have to face certain non-monetary prices, such as, for example, the time and physical cost implicit in the purchase action. Those customers might be willing to bear more monetary costs in order to reduce non-monetary costs and / or obtain better service. "
Here are some examples of non-monetary costs (or not included in the price paid by the customer to the supplier company):
• What a mother must pay for the care of her children, while taking that time to go to carry out the necessary procedures for the acquisition or maintenance of a certain service.
• The cost of fuel or transportation tickets necessary to go to the offices of the company that provides the service.
• The accumulated minutes that, throughout the year, a person spends waiting to be attended, and that he could use in tasks that produce an economic return.
As you will see, they are more or less obvious costs, but all of them come out of the client's pocket due to the conditions of the service, and many due to a poor quality of service received.
So how do you take advantage of these costs to create more value for the customer? And how much more can the price be increased in exchange for that benefit?
For the first question, a comparative analysis must be made between two types of service:
• Your service and the service of the competition, or
• Your current service and a superior quality service.
Among the two services that are in comparison, those conditions of the service that generate non-monetary costs should be highlighted. For example:
Some important aspects to keep in mind:
• Certain non-monetary costs have different value for the client, depending on their profile. The time that a client who is on vacation must wait for their refreshment to be brought to him while he waits sitting on a deck chair by the sea does not have the same value as the same time for a worker who is having lunch during his half hour of rest inside of your workday.
This means that the non-monetary price must be evaluated based on the characteristics of the market to which the service is directed. Only in this way can a numerical value be estimated for each of these benefits.
• This numerical value will be the largest possible price difference between one service and another. If the price of the highest quality service exceeds this limit, the client will not see it as convenient and will opt for the lowest cost, considering the best service "very expensive".
• Clients often "miss" this cost-benefit analysis, or they do not see inconvenience, loss of time and redundant procedures as a real cost.
It will then be the company's communication task to point out the additional benefits, and make the client see that these benefits translate into savings greater than the difference in price that he sees between the two services he compares.
• Once the maximum value that can be added to the service due to the benefit implemented has been found, the same value must be used to verify that the costs to the company of implementing that benefit do not exceed it. Otherwise, it will be an unprofitable upgrade.
I hope this analysis and the recommendations serve you, and that you begin to use the concept of non-monetary prices to increase the quality of your service and thus be able to give more value to your customers, while improving your profit margins.
