Americans spend more than two billion a year on premium gasoline that offers no additional benefit. There are valuable lessons for retail florists in this.

Gasoline, And Why You Should Always Let Customers Pay More

Oct 22, 2016

 

We get so hung up on customers that are focussed on price that we make an expensive mistake – we forget about those willing to spend more. Premium gasoline shows why we always need to give customers the option to spend more money.

 

This article takes a look at how Americans wasted over two billion dollars just last year on Premium gasoline that did not provide any additional benefit.

 

"With 16.5 million U.S. drivers having used premium fuel despite the vehicle manufacturer’s recommendation in the last 12 months, AAA conducted a comprehensive fuel evaluation to determine what, if any, benefit the practice offers to consumers"

 

So there it starts. Despite the fact that almost everyone resents high fuel prices 16.5 million Americans chose to pay extra for premium fuel, even though the manufacturer advised them not to.

Surely there must be some small benefit anyway though, right? Better performance? Better mileage? But no...

 

"After using industry-standard test protocols designed to evaluate vehicle performance, fuel economy and emissions, AAA found no benefit to using premium gasoline in a vehicle that only requires regular-grade fuel."

 

It's worth noting that we're talking about manufacturers suggesting regular gasoline, not necessarily advising against premium gasoline. However dealers often do advise customers NOT to buy premium fuel, pointing out that it's not just wasteful but may in fact be detrimental.

Why? Why would they choose to spend more money when they have not only been told that it's not necessary but potentially dangerous?

One simple reason – because it is more expensive.

There are two lessons here for anyone that sells a product:

 

High Prices Make The Most Credible and Authoritative Claims About Quality

The automobile owner that buys premium when they have been told it doesn't provide any benefit ignores the owners manual. They ignore the manufacturers recommendation. They ignore the advice from their dealer and mechanic.

They pay more because they know that the premium must somehow be better. And they know that because it's more expensive.

When customers don't truly understand a product they assume a correlation between quality and price. They believe that the higher priced product must be the better product.

This effect is so profound it doesn't just influence their decision to buy the premium fuel, it shapes their experience with that fuel. Ask someone that does this – they will almost invariably tell you that "my car just runs better when I fill it with premium. You can feel it."

It's not true, but they truly believe it. And they believe it because of he higher price.

 

Some People Will Always Choose To Spend More Money

The other thing to remember is that there are always people that will choose to spend more money, even when it is completely pointless.

It's easy to forget this. There are a lot more people that are focussed on low prices, and they tend to make more noise. We get caught up in thinking that everybody is focussed solely on price.

But that's not the case, There are alway people that will happily pay more. There aren't as many of them, but they are out there, and if we don't give them the chance to spend more by offering premium versions we're giving away profit.

Even worse? We can lose their business entirely. They'll go somewhere else, to a vendor whose pricing better aligns with the way the customer values the product. Imagine the owner of a gas station who, noticing that most people buy the low grade switches to selling that grade. Is the customer that wants premium going to switch? No – they're going down the street to buy premium from the competition. The first gas station doesn't just lose a sale, they lose a sale that would have been more profitable.

 

Always remember – there are customers that will judge the quality of your product by the price that you charge. Include some high priced items to establish, with authority, that you sell a quality product. And there are always people willing to pay more, so give them the chance by offering more expensive options.



Category: Examples

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