Have you ever asked yourself what your start-up is worth? We would rephrase the question a bit: What is your startup worth from the perspective of your customers? What value does it have for them? That’s what this article is about.
What is the brand equity of your startup?
The first question you should ask yourself is what value your own brand or start-up or scale-up has for customers. Because as mentioned in past articles, a brand exists in the minds of people, how it is perceived and what meaning it has for the respective person. This is also how the value of your start-up can be measured. So the question is, who is your brand for and who is your brand not for? Is your product or service for a certain group of people? Is it high-priced or a low-cost product?
What does a price say about the quality of your brand?
Since brands take place in people’s minds and reflect their own identity, this means that people consciously decide which brand or from which start-up or scale-up they buy something. If you are a person who prefers a luxurious life, you will be attracted to brands that embody this. If, on the other hand, you are a person who likes to save and live more sustainably, you will be more attracted to brands that communicate this.
Therefore, the quality of a brand is also the perception of each person. A high price can make us trust a brand more than a brand with the same product, which is much cheaper. A good example that Chris Do presented in a meeting is a bottle of water. Imagine you are in a supermarket and you want to buy a bottle of water. Now imagine you have three different bottles to choose from, but all three don’t have a label, so you don’t know what brand is behind them.
One bottle costs €0.25, one €2.50 and another €5.00. Which of the three bottles do you choose and why? Most people probably reach for the bottle that costs €2.50 because they trust it more. Because trust is not only the foundation of a brand, but we tell ourselves why it is better, even though you would also get a bottle of water for €0.25.
The story you thus tell yourself is not, do I need this bottle of water for €2.50 or even €5.00 but I want the bottle of water for €2.50 because I trust it more and I want to do something good for myself.
How to justify the price and value
So if you have decided on a bottle for €2.50, it is possible that another person will ask you why you didn’t buy the bottle for €0.25, since it is much cheaper and it wasn’t clever of you to buy a more expensive one. Now we are again at the point, which values, identity and thus meaning a mark in the heads of humans plays. You will probably now tell us why water for €2.50 is better than water for €0.25.
You’ll find a similar discussion in numerous other categories and brands, such as the smartphone world. Which is better? An Apple iPhone or a Samsung Galaxy? Which red wine is better? Which car is better?
So the question is also for you: Have you ever bought something you never needed but wanted? And if you tend to pay more for a brand so you can trust it, what story do you tell yourself about a brand that offers its products or service very cheaply? Does a brand share your personal values? Does a brand’s purpose and goals appeal to you because they speak to your own identity?
The value of your brand is personal
In summary, the value of your brand or startup is personal. Some people buy your product because they tell themselves that your startup is the right one, whereas another person stays away because they are looking for a cheaper provider. That’s why it’s so important as a startup to know your own target customer group, who they are, what they want, how they live, and most importantly, what their lifestyle is.
Only when you know your customers in detail are you in a position to consciously position your brand so that the right people feel addressed by you. The more people you attract – or rather, the more of these people you want as customers and who fit your brand – the more the value of your start-up will increase.
Need help with pricing strategy?
If you’re not clear on your pricing strategy and don’t have a brand strategy, check out our Brand Strategy Sprint. In this session, you and your team will find out what your customers want and what value your brand has for them. Feel free to book a meetingand tell us about your start-up or scale-up.