In many ways, my mother was a classic example of the frugal housewife. During the week, she shopped carefully and wisely, choosing the foodstuffs and other supplies that delivered the best value at home. Every Saturday, she sat at the kitchen table where she totted up her weekly income and outgoings to the last penny.

When it came to supermarket shopping, my mother had two choices. We lived slightly closer to Quinnsworth than to Superquinn, but each of them was within easy walking distance of our home. Given her thrifty nature, you would have imagined that my mother would have made a beeline every week to Quinnsworth and its lower prices. Yet she chose to go to Superquinn instead.

Now, as I’ve said, my mother was no fool when it came to money. She knew that she paid a premium there, and could easily have saved pounds on her weekly shopping if she’d gone to Quinnsworth instead. Yet, through a range of initiatives and clearly superior service, Feargal Quinn persuaded my mother, and thousands like her, that there was value in his offer, and she was happy to pay the price.

In most markets, price only becomes an issue when the business-owner fails to persuade the customer of the value in their offer. Even in 2011, when it’s simpler to believe that the customer is choosing on the basis of price, there’s plenty of evidence that certain brands continue to be able to charge a premium.

When it comes to setting the price for your product or service, and knowing whether you can charge a premium, it’s important to understand how your customer assesses the value in your offer. In a purely technical exchange, where your customer is given no compelling reason to choose between one offer and another, then they are typically prepared to pay only the cost to you in bringing your product or service to market. This is what I call the Go To Market cost. This Go To Market cost may be made up in a number of ways, including those charges made for raw materials, manpower, production, transport and delivery.

Yet when you add more value to your offer, and invest it with qualities that truly matter to your customer, then they are prepared to pay a higher price. This price difference is the Brand Premium and represents the added value that your customer sees in your offer.

Your customer finds this added quality in your product or service when it goes further than simply solving a technical difficulty. In my mother’s case, this was her need to put food on the table. When your offer also helps your customer to resolve a soclal conflict, then it automatically goes up in the customer’s estimation.

Feargal Quinn understood this, and as a grocer to his fingertips, knew what it took to add value to the food he offered to my mother and her neighbours. He brought the bakery into the supermarket in order to increase the worth of his bread. He offered carrot greens at no charge to customers with pets in order to add to their appreciation of his offer. And he banned sweets from his checkouts so as to hammer home his commitment to his bullseye customer, the young mother with demanding children.

Whilst Quinnsworth and others sold in a technical way, and charged accordingly, Superquinn was adding value at every opportunity through its mastery of the social exchange between buyers and seller. Put simply, Feargal Quinn knew how to make his customers feel special.

So when it comes to pricing your offer, you need to take as your starting point your Go To Market cost. If your product or service offers only a perfunctory solution to a technical difficulty, then you can only charge that Go To Market cost. But if you add value to the exchange by helping your customer resolve a social conflict, then you can add a Brand Premium, one that reflects the importance of your product or service in the life of your customer.

© Gerard Tannam, Islandbridge Brand Development Limited