The business professionals who decide on the price of a product or service have a really difficult job. 

Not only do they have to measure the competition in the market, and calculate the costs that must be covered… they have to appease their customers.

Regardless of your price point, if it feels like you are either: 

  1. Drastically undervaluing yourself and your services.
  2. Receiving complaints about charging too much.

Then there’s something you need to know… your brand could be suffering from a product value gap. You could be losing sales (or profit) as a result.

What is a Value Gap?

What is a Value Gap?

A value gap is the divide between what customers perceive the value of your product/service is and what you believe (and the price you assign as a result). 

While the majority of value gaps could critically damage your reputation, positive ones – though rare – could be working in your favor. This is when customers believe you are giving them more than you are.

Example of a Value Gap

Let’s say, for example, you pay for CRM software on a subscription model, and it costs you £100 per month. This cost can be reasoned, though, as the provider is certain you’ll be able to enhance your communications with customers and convert more leads.

However, if you downloaded it to find that only 50% of the application was useful to you (and there were even some usability issues), then you’d be pretty frustrated. After a while, you might decide to use an alternative instead.

When this happens, the service provider will lose your money… and your good faith. 

Why is Identifying the Value Gap so Important?

As a one-off instance, a business would accept the loss of a customer and move on. 


But,  if numerous customers are having issues or complaining about the price of your product or service (despite your certainty that you’ve positioned it correctly), you might deduce there’s a value gap present. For some reason, they wouldn’t agree that the purchase would be worth the money, and, unless fixed, you’ll be ruining relationships with your audience and damaging trust.

What Causes a Value Gap?

Sadly, discovering why there’s a value gap present isn’t an easy process, even if you can recognize where and why users are experiencing problems.

This is because value gaps aren’t only caused by a misalignment with your pricing and what customers would be willing to pay… there are a variety of other factors.

1. Customer Experiences

Even if your product does exactly “what it says on the tin”, there is still an opportunity for you to invest in and cultivate customer satisfaction to elevate perceptions.

From the moment they are browsing through a website right through to the end sale, there are plenty of opportunities where value can be added or lost. 

If someone has a difficult time making a purchase, they might adopt the mindset of “it better be worth it” and automatically be more critical of what arrives. This is going to cause a value gap. On the other hand, if that same person had an amazing purchasing journey then they would be excited about its arrival. 


Evidently, your management of their emotional response is critical in the perception of your product. By tapping into every element of your customer’s experience and making sure it is optimized for the best results, you increase your chances of closing the gap.

2. Your Brand Reputation

A value gap can also be caused by the strength of your brand (or lack thereof). 

There have been plenty of product launches that, at face value, should have been successful… but customers weren’t willing to pay the price established. 

Why? Most likely because they didn’t trust the brand.

Luckily, this also works the other way around. 

Take Apple, for example. The majority of their products can be sold to customers at a markup of between 125-260%. This is because they have a fantastic brand reputation for their industry-leading innovation, and have built a culture around “FOMO” (fear of missing out). 

Over time, they’ve proved themselves as a reliable supplier of phones and have created a loyal fanbase. These individuals all perceive the value of an iPhone as higher than it is because of the brand’s reputation. 

3. The Quality of Substitutes Available

As human beings, we naturally make comparisons. We can’t help it.

We measure ourselves against others all the time, and, if we’re preparing to purchase a product or service, we’ll compare those, too. If your competitors have similar products available to you that seem like they are a better option than yours, a value gap can form.

To make sales, you’d either be expected to significantly drop your price (and possibly make a loss) or rework what you’re selling. Many businesses struggle to help customers see the benefits of their product over another and face an ongoing issue generating sales because of it.

Ideally, you’d slowly provide evidence of the quality of your work with the intention of closing the value gap, and, with time, prospective customers would start to believe you.

4. Your Product’s Unique Selling Points

Furthermore, the way you promote and present your products/services can transform customer perceptions. For instance, you could package a relatively basic product with the intent of appealing to a high-end market. The more reasons you can use to persuade a customer why something is worth the price you have set, the more likely they are to perceive and judge it in a positive light.

5. Identification of Your Target Audience

Another secondary cause of a value gap is an issue with your segmenting, targeting, and positioning, leading you to be delivering your product to the wrong audience.

After all, someone who is similar to your ideal customer persona – but not identical – might have a low level of interest but would need a lot of persuasion. In this case, you’d have to provide pricing offers that make the “risk” worth it – and let the results speak for themselves.

How to Identify Your Companies Value Gap

As you can see, value gaps don’t just arise because a specific product isn’t good enough for what the market wants. 

Therefore, to identify your company’s value gap, you need to conduct a comprehensive review of internal and external perceptions to see where issues are arising. 

Host customer interviews, speak to employees, revisit initial product research, and bear in mind the “symptoms” of value gaps:

  • underperforming campaigns
  • negative feedback
  • low conversion rates
  • lack of user growth

At the end of the day, you could be offering cure to cancer (which would obviously be welcomed into the market), but, if no one knows how to use it… very few people would be willing to spend money.

How Can You Close the Value Gap?

If you want customers to be willing to pay the price you’ve set, then, first and foremost, you need to ask yourself one simple question:

What is the value of my product? What is the gap that currently exists?

Once you’ve found the answers, you have a clear goal to work towards. Then, you need to funnel time and resources into demonstrating product value.

Although this mostly comes down to your marketing strategy and how you pitch your service, it can also be done by:

  • increasing the information available for your product
  • spending time and effort on enhancing customer experiences
  • publishing FAQs online and providing a 24/7 support team

Above all, to fix a value gap, make sure to listen to what your audience is saying. 

The reality is that they’ll have a reason they don’t think your product is worth the money and these issues could be easily addressable. 

How Can You Close the Value Gap?

Userlane: Closing Value Gaps in Software

A simple way to reduce negative value gaps that are present in a software service would be to ensure users can use every feature available to the best of its ability. 

To do so, companies can implement a Digital Adoption Platform that provides real-time guidance and reduces troubleshooting. This would uplevel your chance of customer success.

Ready to learn how? Request a demonstration today.

 

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